US senators grill Facebook on its plan for libra cryptocurrency
Social media giant ‘delusional’ if it believes people will trust it with money, senator says
David Marcus, head of Calibra at Facebook, testifies about Facebook’s proposed digital currency called libra, during a Senate banking committee hearing on Tuesday. Photograph: Saul Loeb/AFP/Getty Images
Facebook is “delusional” to believe people will trust it with their money, a US senator said as legislators from both sides of the aisle grilled the social media company on its plans for a digital currency at a hearing on Tuesday.
Facebook is fighting to get Washington onside after it shocked regulators and legislators with its announcement on June 18th that it was hoping to launch a new digital coin called libra in 2020.
Since then, it has faced criticism from policymakers and financial watchdogs at home and abroad who fear widespread adoption of the digital currency by the social media giant’s 2.38 billion users could upend the financial system.
“Facebook has demonstrated through scandal after scandal that it doesn’t deserve our trust,” Democratic senator Sherrod Brown, the ranking member of the Senate banking committee, said in his opening remarks. “We’d be crazy to give them a chance to let them experiment with people’s bank accounts.”
Senator Brown added during questioning that he thought it was “delusional” to think individuals would trust the social media company with their “hard-earned” money.
The committee is questioning David Marcus, the company’s top executive overseeing the project, on issues ranging from how libra could affect global monetary policy to how customer data will be handled.
He received a frosty welcome from Democrat legislators and several Republicans, who shared many of the same concerns.
“I don’t trust you guys,” said Republican senator Martha McSally. “Instead of cleaning up your house you are launching into a new business model.”
Mr Marcus, who was president of PayPal from 2012 to 2014, tried to assuage concerns in his opening remarks by promising that Facebook would not begin offering Libra until regulatory issues were addressed.
“We know we need to take the time to get this right,” Mr Marcus, who is also due to testify before the House financial services committee on Wednesday, said.
He said Facebook understood “loud and clear” that people did not want financial details connected to their social media data.
Prior to announcing its libra plans, Facebook was already facing significant backlash over mishandling user data and not doing enough to prevent Russian interference in the 2016 US presidential election.
Concerns raised through questions included how the company plans to prevent money laundering through the new payment system, how consumers’ data and funds will be protected and how the Geneva-based association created to run the system will be regulated.
Senator McSally asked Mr Marcus how consumers could trust Facebook not to share their payments data.
“I know we have to earn people’s trust for a very long period of time,” Mr Marcus said.
The social media company has pledged that its payments subsidiary called Calibra will share customer data with Facebook and external third parties only if it has consent, or in “limited cases”, where it is necessary.
Critics have expressed anger that the company would have got so far in its plans for such a potentially groundbreaking project without extensive input from policymakers, especially when it is already in the spotlight over privacy issues. – Reuters