These Are the Main Things Facebook CEO Mark Zuckerberg Told Congress
Mark Zuckerberg, founder and CEO of social media giant Facebook, swore that the Libra Association is an independent organization and that Facebook would leave this project if it decided to launch the Libra token without the regulatory approval of all U.S. financial regulators.
Mark Zuckerberg during the hearing on October 23. Source: a video screenshot, Youtube
He was speaking at a hearing in Congress in front of the House Financial Services Committee today. The hearing, titled “An Examination of Facebook and its impact on the Financial Services and Housing Sectors,” is also expected to have significant implications for other digital services providers and stablecoin projects.
Here are some of the key points of the hearing:
- Zuckerberg confirms that the point of Libra Association is not to build something that is either unregulated or decentralized.
- The CEO reassured that Facebook does not control the independent Libra Association and its members decide to move forward with something that Facebook is not comfortable with, the company will withdraw from the association.
- They're not going to launch the project until they satisfy all U.S. financial regulators.
- The U.S. Financial infrastructure is outdated and the Libra Association is trying to rethink what the modern financial system should look like.
- Representative Brad Sherman: "For the richest man in the world to come here and hide behind the poorest people in the world and say that's who you're really trying to help. You're trying to help those for whom the dollar is not a good currency: drug dealers, terrorists, tax evaders."
- Facebook once again played the China card, as their CEO stated: "But I also hope we can talk about the risks of not innovating. While we debate these issues, the rest of the world isn’t waiting."
- While answering the question "wouldn't it be easier to use a digital dollar?" Zuckerberg said that this token is good for coping with U.S. regulators but would interfere with global usage.
- After much elaboration from representative Bill Foster it appears that it may be possible for Libra to have anonymous transactions.
- Most of the critical Libra's policies have not been created yet.
- Zuckerberg repeats that the plan is to gradually evolve Libra into a permissionless blockchain, but some of the representatives are skeptical about it.
- Libra will be backed mostly by dollars.
- "One of the things that you're probably sensing from us is that the dollar is very important for us as a tool," said representative Juan Vargas, referring to the weaponization of the U.S. dollar.
Meanwhile in a written testimony published ahead of the hearing, Zuckerberg stated that a billion people all over the world and approx. 14 million of them in the U.S. are left outside of the financial system, and the current system is failing.
“People pay far too high a cost—and have to wait far too long—to send money home to their families abroad. The current system is failing them. The financial industry is stagnant and there is no digital financial architecture to support the innovation we need. I believe this problem can be solved, and Libra can help,” he said in the testimony. “Facebook is about putting power in people’s hands,” he added.
However, as reported today, some of his claims have been rather contradictory. Although the CEO says that “giving people control of their money is important too,” he does not mention monetary policy, which is tightly controlled by the governments and central banks of the world. It seems that Zuckerberg will stay committed to their previous statement that “Facebook will not be a part of launching the Libra payments system anywhere in the world unless all U.S. regulators approve it.”
Watch the hearing here:
On a related note, yesterday, the U.S. Department of Treasury agreed to an affirmative investigation into Libra and Calibra in order to examine the project for possible systemic risk.
“It is unclear whether U.S. and foreign regulators will have the ability to monitor the Libra market and require corrective action, if necessary. This concern must be addressed if the Libra is to launch,” states the Department of Treasury.
Overall, the response to the project Libra from all sorts of regulators from all over the globe hasn’t been positive so far, thus forcing several of the Libra’s founding members, including Mastercard, Visa, eBay, and PayPal to leave or distance themselves from the association. According to BBC, none of the 20 remaining founding partners of Libra have yet committed to financially backing the project.
In July, the committee’s Chairwoman Maxine Waters sent a letter to Facebook asking for an immediate halt of the project, which resulted in two days (see the summary of day 1 and day 2) hearing involving David Marcus alone.