Facebook’s David Marcus vs. Senate: Key Takeaways from the Battle for Libra
| Updated by Teuta Franjkovic · 7 min read
Facebook crypto chief David Marcus testified before the Senate Committee on Banking, Housing, and Urban Affairs during a hearing examining Facebook’s proposed digital currency Libra and data privacy considerations.
David Marcus, who heads Facebook’s cryptocurrency subsidiary Calibra, is testifying in front of the Senate Committee on Banking, Housing and Urban Affairs on Tuesday, July 16th, 2019 amid concerns about data privacy among lawmakers and platform users. With a lot of animosities, a lot of shame throwing and a lot of really inappropriate language – U.S senators showed their real face – face of the people not willing to learn and wanting to keep their monopoly untouched.
Senator Sherrod Brown started with saying that he doesn’t care at all for technical issues and kept asking Marcus if he trusted Libra enough to put skin in the game this way. He said:
“You really think people should trust you with their hard-earned money, I think it’s delusional. Will you accept all of your compensation in that new currency?”
Marcus was pretty articulate in his explaining saying that Libra is “not designed as a substitute for bank accounts.” After Brown pressed him, the Facebook executive said he would trust all of his assets in Libra. Marcus reiterated his talking point that Facebook would be only one of many companies involved in the Libra project, Brown shot back:
“You know better than that, only Facebook as a social media company has access to 2 billion people.”
This hearing was pretty much different than the one with Mark Zuckerberg. At least there were some younger senators who actually knew what the internet was. However, they don’t seem to know the difference between Facebook and Calibra so they kept attacking Marcus for Facebook’s failures back in 2014, 2016 and 2018.
Even though Marcus tried to explain that he wasn’t even considered for the team, or that Calibra wasn’t planned then, some senators kept asking about Facebook failures. The most eager was senator Kennedy who called Facebook “a country” and not the company.
Senator Pat Toomey, the Pennsylvania Republican, asked Marcus whether Facebook ever intends to seek users’ consent to monetize their financial data, the way the company does with other user data.
“Someone will have data of those people. You’re telling me that nobody in Calibra is going attempt to monetize it?”
Marcus said that there is no chance for that scenario to happen. He said that nobody in Calibra will have this data. Only the wallets will have that data.
Talking about safeguards Libra will have, Marcus said that Facebook is a tech company where all ideas are treated equally.
“We want to ensure that people, as long they have a legitimate use of the product, can do what they want with their money. We will be thoughtful with writing these policies.”
There were plenty more questions of possible money laundering or even weapon trade that Libra could be used for. The exact question from one of the chairman Crapo was: What if one neighbor wants to sell shotgun to another?
Marcus answered that weapons and firearms are already regulated and treated on Facebook platform and that he believes that they should only get in the way in very exceptional cases.
The real question we might ask is: why would a neighbor want to use Libra for weapon trade since it’s known that in most U.S. countries, if you are under 21, you cannot buy a beer, but for sure you can buy yourself a nice rifle.
Crapo also asked if Facebook would collect data about transactions made with Calibra that are made on Facebook, such as when users buy products from businesses they discover through Facebook. Marcus said that Facebook would still let users pay with credit cards and other mediums as well as Calibra.
That means that even though Facebook might not know how much money is in someone’s Calibra wallet or their other transactions, it might know how much the paid and for what if that transaction happens over their social networks.
However, Marcus said cash transactions are where most crime currently happens. He says “it will be better” if a lot of transactions move to digital. He says that people who use Libra through Facebook’s upcoming Calibra wallet will have to upload a government ID for verification.
As presumed, it’s normal that the congress and leading financial institutions are afraid they will not be able to apply their laws, their own interests to the people so the question of how would Libra have impact on US dollar as currency and what sanctions will there be – was very much expected. Marcus said:
“You have to understand, that, if we don’t lead in this space – others will. Libra is alternative with which consumers will have ability to use the wallet. If we stay put, in 15 years, we’ll have half of the world operating on blockchain technology, and half of the world will be blocked. we don’t want that.”
Senator Schatz was pretty interested in issues Facebook had fixed. He also wanted to know why the company is moving to a new challenging thing when they haven’t fix problems at Facebook. Marcus answered:
“It’s important that we continue to innovate on behalf people we serve.”
But Schatz wasn’t “Schatzy” at all and attacked Marcus saying :
“Why in the world should Facebook do this? Because you’re so big and you want to get even bigger?”
Marcus just smiled nodding his head but we ask – why not.
Senator Menendez said that Facebook is the company that doesn’t think about the consequences of its actions.
“Trust is something you earn and Facebook certainly hasn’t earn it. How would you keep Libra separate from your social media data?”
Marcus explained that that are totally different separated infrastructures.
Menendez then asked if the Libra Association would freeze the assets if terrorist organizations were identified. Marcus said that Calibra and other custodial wallets that actually hold users’ Libra could do that, and that regulated off-ramps could block them from converting Libra into fiat.
However, that could mean that there may be no way for the Libra Association to stop transfers between terrorists’ non-custodial wallets, especially if local governments where those terrorists operate don’t step in.
One of the senators, however, looked back on recent racist tweets from President Trump saying that social media’s task is to prevent that and that he respects that. He said social media should allow freedom of voices.
“I hope we’re gonna go away from these nonsense that we heard from president and his right wing politicians. There is this uncertainty around Bitcoin and Libra’s goal is to have billions of people around the world to use that coin.
There are concerns how to believe Libra associations if we are not believing Facebook. When you’re talking about world currency, I am not sure that you will have sufficient resources but I cannot wait to see what will happen.”
Senator Toomey added:
“It strikes me as wildly premature for us to come to the conclusion that we have to act now to prevent what could be a very constructive innovation in financial services. I think there are tremendous potential benefits in blockchain technologies and cryptocurrencies … So I just think we should be exploring this, and considering the benefits as well as the risks.”
Brown went on again to cite Mark Zuckerberg and asked what does it mean that trust is primordial? Marcus answered that it means that they need to continue to do better in serving our customers and we’ll do what it takes to earn their trust.
However, Brown recalled 2004 when Zuckerberg called Facebook users “dumb fucks” and asked why would Marcus cite someone who obviously “doesn’t give a damn for his users”.
“We need to continue to work very hard to ensure that we are the ones to be believed in again.”
Experienced creative professional focusing on financial and political analysis, editing daily newspapers and news sites, economical and political journalism, consulting, PR and Marketing. Teuta’s passion is to create new opportunities and bring people together.