Libra’s Congress Hearing Pulls Bitcoin Below $10,000US
Examining Facebook’s Proposed Digital Currency and Data Privacy Considerations
The first of two congressional hearings kicked off today at 7am with a tense exchange between the head of Calibra, David Marcus and Senator Sherrod Brown, a senior member of the Senate Banking Committee. Yesterday, David Marcus released his prepared testimony before congress explaining how the Libra association will be regulated by the Swiss governments and their intention to comply will all U.S Tax, anti-money laundering, and anti-fraud laws. Senators’ Brown opening statement brought forth many of the alarming issues.
WHAT’S IN IT FOR FACEBOOK?
Facebook’s core revenue model around Libra is that more online commerce will lead businesses to spend more on Facebook ads. During the hearing, Marcus stated that it is not the intention for Calibra to sell or directly monetize user data directly, though if offered, it would ask consent to use their data specifically.
The main takeaway from today’s hearing is that many committees members simply don’t trust Facebook and because of that, they have serious concerns about Libra’s entrance into the largely unregulated cryptocurrency market.
In response, Marcus stressed,
“You will not have to trust Facebook” because it’s only one of 28 current and potentially 100 or more Libra Association members and it won’t have special privileges”.
When repeatedly asked why Facebook is pushing Libra to happen, Marcus noted that blockchain technology is inevitable and if the U.S. doesn’t lead in building and regulating it, the tech will come from places “out of reach of our national security apparatus,” raising the specter of China. China’s central bank, the People’s Bank of China is said to be ramping up its work creating its own digital currency after Facebook announced Libra.
Concerns
In addition, many senators opened their remarks by mentioning concerns about user privacy and data security, a recurring issue for Facebook. They 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 simply explained 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 they paid and for what if that transaction happens over their social networks. The company promises that Calibra will not share users’ financial data with Facebook, except under limited circumstances such as for fraud mitigation. The two will also share financial data if users agree to it, though it is unclear how it will ask users for their consent.
In Conclusion
The committee members did not take a uniformly harsh stance on Libra with many mentioning the importance of US’s leadership on developing a framework for managing crypto and fin-tech innovations. With a conclusion still up in the air, Bitcoin seems to have taken a hit this morning, tumbling below $9,000 USD. BTC’s price may continue to falter this week as Libra faces another hearing before the House Financial Services Committee on Wednesday.
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