On Tuesday, Democratic and Republican lawmakers said that Facebook Inc’s achievements from what they describe as unreliability should prevent the launch of digital currency, indicating the plan as “delusional” and “crazy” at the Senate hearing. Facebook struggles to find Washington after shocking regulators and lawmakers with its announcement on June 18th that it hopes to create crypto called Libra in 2020.
Since then, the social media company faces criticism from politicians and financial observers at home and abroad who are afraid that widespread adoption of the 2.28 billion Facebook currencies could speed up the financial system. Democratic senator Sherrod Brown, the member of the Senate Banking Committee, said in his opening speech that, “Facebook has demonstrated through scandal after scandal that it doesn’t deserve our trust. We’d be crazy to give them a chance to let them experiment with people’s bank accounts.”
During a questioning, Brown added that he thought it was “a delusion” to think that people would trust the social media company with their “hard-earned” money. Before announcing Libra’s plans, Facebook had already faced a negative reaction to incorrect consumer data and did not do enough to prevent Russia from intervening in the US presidential election in 2016.
David Marcus, the company’s highest supervisor who oversees the project, testifies questions ranging from how Libra can influence global monetary policy to the way customer data is handled. He received a grim welcome from Democratic MPs and several Republicans who shared many of the same concerns.
Republic Senator Martha McSally said that “I don’t trust you guys. Instead of cleaning up your house you are launching into a new business model.” The president of PayPal from 2012 to 2014, Marcus, tried to calm down the fears by promising that Facebook would not start offering Libra until regulatory issues were addressed. “We know we need to take the time to get this right,” Marcus, who is also due to testify before the House Financial Services Committee on Wednesday, told lawmakers.
Legislators have raised a number of concerns, including how the company plans to prevent money laundering, how users’ data and resources will be protected, and how the Geneva association created to manage the system will be regulated. Marcus said, “I know we have to earn people’s trust for a very long period of time.” when asked if users could trust Facebook that they would not share their payment information.
The Social Media Company has promised that its payment subsidiary, Calibra, will share customer data only with Facebook and external third parties if agreed, or in “limited cases” where necessary. Critics have expressed anger that the company will advance to this potentially innovative project so far without extensive input from politicians, especially when the company is now the focus of privacy.
Facebook has distributed a small part of its huge workforce to work on the project. Kevin Weil, who runs a product for the Libra initiative, told Reuters on June 18th. One of the former officials told Reuters that the company had tried to keep the project undercover even internally. Employees who did not participate did not know much about it, not even working under the name Libra.
In the weeks preceding the announcement, the company officially began to reach key regulatory bodies, including the Federal Reserve, the Treasury and the Commodity Futures Trading Commission. But two people who know the discussions said talks remain vague, with the key details of the project being discussed only at the theoretical level.
On Tuesday, Jake Clayton, chairman of the Securities and Exchange Commission, told Reuters at an event in Washington that he had not been discussing Libra with Facebook after his announcement but would welcome more information.
Some lawmakers were disappointed by Facebook’s lack of clarity before and after June 18, three sources from Congress announced. A Democratic Assistant described the company’s contacts with MEPs as “inept and entitled “. Marcus said at a hearing on Tuesday, that Facebook said it had announced the project at an early stage to get feedback from stakeholders.