Mark Zuckerberg today got a grilling by the Maxine Waters and the Senate committee about Libra’s planned cryptocurrency stablecoin Libra. It was a very eventful event packed full of questions both related to Libra and otherwise.
Each Senator was given an allotted time (around five minutes) to grill the Facebook founder and some really took the opportunity to vent and sometimes it was a difficult watch.
Mark Zuckerberg was second to speak after Maxine Waters opening address. He spoke about Libra being able to bridge the gap of inequality to the one billion or so unbanked.
“Facebook’s plans to create a digital currency, Libra, and a digital wallet, Calibra, raise many concerns relating to privacy, trading risks, discrimination, opportunities for diverse-owned financial firms, national security, monetary policy and the stability of the global financial system,” Waters said.
The main point of the session was Zuckerberg saying Libra will not start unless all of the relevant regulators have been appeased.
He also noted that the financial system was lacking and this is an innovation that is born out of the banking industry being slow and inefficient.
Then the floor was handed over to the Senate. Some where nice, praising Zuckerberg’s success and others seemed more annoyed by his actions in the business world.
Interestingly they did not all stick to the subject of Libra. Some spoke about vaccines and others about advertising but unlike some of the senate members, I will stick to the subject of Libra.
When asked about how he thinks Libra will affect the Federal Reserve and the current monetary system. Mark Zuckerberg stated the fact that Libra will be made up mostly of dollars was supportive of the US economy. He was then asked why not just make a USD backed coin or a GBP backed coin. The Libra co-founder then said that is actually something the Libra Association is looking into. Having digital coins for each currency in the Calibra wallet could be an interesting development.
Also, Mr Zuckerberg was then asked if the basket could change? He stuttered and did not have an answer to this question. He then proceeded to tell the Senator that he had a good point and would take it to the Libra Association. The main concern was if they decided to add in the Chinese Renminbi if China’s economy grew to overtake the US or if one of the basket currencies crashed.
There were some very testy moments as Representative Brad Sherman, from California, told Zuckerberg that he was hiding behind an optimistic story of trying to help the world’s poor when profits were the real motivation for Libra.
Another main point of trepidation was the security of data. Zuckerberg proceeded to say maybe Facebook was not the best choice in company to bring this innovation forward after recent scandals. He began to list the ways Facebook would ensure that the data was safe. Saying it will be the most sophisticated security in the world. The issue seemed to be trust, the Senate brought up previous examples of Facebook’s past, like the Russian meddling in the American election and the Cambridge Analytica scandal. Zuckerberg was adamant that the security would be tighter.
Then the issue of money laundering popped up. Zuckerberg confirmed that the Calibra wallet system will not be anonymous. There was one issue that cold storage device could be used to launder money. He has no answer for this and was not given any time to think. He was shut down and almost admitted it was an issue.
When asked about why Libra choose Switzerland over the US for location Zuckerberg said:
“Switzerland has certainly been forward-leaning on wanting to work through systems like this, but one of the things I want to be clear on is that the Libra Association is independent and we do not control it,”
Overall we learned a lot about Libra but it felt like the Senate members used the opportunity to grill the Facebook founder about Facebook, not Libra. He defended himself eloquently and with class. Especially as some of the questions were off subject and nothing to do with the reason he was there. Now it seems that the ball is in the regulator’s court. He has committed to not launch until they are all happy so all we can do is wait for the tennis match to start between Libra and the financial regulators.
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