Facebook Libra Senate Hearing: Digital Coin Draws Tough Questions

Republican and Democratic Senators sharply questioned Facebook’s plan to create its own digital money, according to Bloomberg.

At a hearing before the Senate Banking Committee, lawmakers compared the social media giant to a toddler playing with matches who burns the house down, blasted it for repeatedly violating consumers’ privacy and accused the company of cheapening social discourse and polarizing America. Many expressed incredulity that Facebook would be able to safeguard people’s finances.

The senators’ ire isn’t coming as a surprise to the company, which has been reeling after a series of privacy breaches and questions about its role spreading fake news in the 2016 presidential campaign. Even as the rhetoric rose, hearing focused attention on how cryptocurrencies should be overseen by the federal government. At least a half dozen agencies, including the Fed, the Securities and Exchange Commission and parts of the Treasury, have some say in the matter but none has taken a lead role.

Facebook’s top executive on the project David Marcus pledged to address their concerns about the token, called Libra. "We will take the time to get this right,“ he told the committee, testifying in a packed hearing room. Marcus said that he didn’t know which agency might oversee Libra but pledged to work with whatever regulator might step up. He also said that the decision to base the cryptocurrency operations in Switzerland was not a move to evade U.S. regulation.

Marcus pushed back on some of the criticism, explaining that the token isn’t intended to compete with countries’ national currencies and won’t interfere with central banks’ monetary policy. Additionally, he said user data would be protected. He also stressed that Facebook is just one of dozens of companies involved in Libra, and said that its control over the coin would be limited.

At least one senator, Republican Pat Toomey of Pennsylvania, stood up for Facebook, saying that efforts to block the Libra launch were“wildly premature“ and misguided. “There are tremendous potential benefits in blockchain technology and cryptocurrencies,“ Toomey said. “We should be exploring this.“

Mostly, however, lawmakers chose to question Marcus about the series of scandals that have engulfed Facebook in recent years. That included the company’s agreement last week to pay some $5 billion in a record privacy settlement with the Federal Trade Commission, as well as its role in spreading pro-Trump fake news reports in the 2016 campaign.