Facebook defends its cryptocurrency ahead of government hearing

Facebook Inc., facing fury from skeptical lawmakers, sought to mitigate concerns that have been raised about its proposed cryptocurrency, stating that the token’s purpose is to create a secure and low-cost way for consumers to move money around the world.

“We understand that big ideas take time, that policy makers and others are raising questions, and that we can’t do this alone,” Facebook’s David Marcus wrote in the letter dated July 8. “We want, and need, governments, central banks, regulators, non-profits, and other stakeholders at the table and value all of the feedback we have received.”

Marcus’s letter follows repeated demands from House Financial Services Committee Chairwoman Maxine Waters, a California Democrat, that Facebook halt the token’s development until policy makers have a better sense of how it might be regulated.

Senator Sherrod Brown of Ohio, the banking panel’s top Democrat, has asked a question on many lawmakers’ minds: if Facebook can’t safeguard its users’ personal information, how can it be trusted to secure their financial data?

A big test for Facebook in trying to persuade lawmakers that there’s nothing nefarious about its coin, called Libra, comes next week. The Senate Banking Committee is holding a hearing on the token July 16, followed by a House Financial Services Committee hearing the next day. Marcus, the executive leading Facebook’s Libra and blockchain efforts, is scheduled to testify before both committees.

The hearings come at a pivotal time for Facebook, which already faces distrust in Washington over its power, major data breaches and a Russian hijack of its platform during the 2016 U.S. presidential election campaign.

In the letter released by the Senate panel Tuesday, Marcus said Facebook has reached out to regulators across the globe, and will ensure that consumers are protected and that the role of central banks and governments with Libra is “appropriate.” He also said that Facebook’s Libra subsidiary, Calibra, has applied for state money transmitter licenses and is registered with the U.S. Treasury Department’s Financial Crimes Enforcement Network, which tries to detect money laundering and other financial crimes.

Facebook, which is ostensibly just one member of a larger Libra Association, has taken the lead on reaching out to regulators and stakeholders to lobby for the digital currency. But Marcus said in the letter that the Libra Association, which includes payments giants like Mastercard and Visa, will continue Facebook’s outreach role as the association grows.

Now read: Facebook’s Libra must be under central bank supervision – China

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Facebook defends its cryptocurrency ahead of government hearing