Banking News

Facebook Calibra’s David Marcus responds to US finance regulators

maxine waters us house of representatives

David Marcus, CEO of Facebook’s blockchain subsidiary Calibra, has written a reply to last week’s letter from the U.S. House of Representative’s Financial Services Committee, according to The Hill. Penned by Representatives including Maxine Waters, the letter requested for a complete stop of Facebook’s cryptocurrency activities.

Waters et al. voiced concerns that the purpose of the cryptocurrency Libra was unclear, and that the governing Libra Association was “too big to fail”. With such controversies as Cambridge Analytica, the Representatives have concerns over Facebook’s involvement.

Marcus echoed his blog post of 3rd July in his reply; that Facebook announced the Libra Association early, to leave time for feedback.

“I want to give you my personal assurance that we are committed to taking the time to do this right,” he said in the letter, also dated 3rd July. The Hill claims that Marcus defends Libra’s purpose of helping those without access to a bank account, but with access to Facebook or WhatsApp.

“Libra is about a big idea,” the former Paypal boss wrote. “The goal of the Libra Association is to reduce transaction costs and expand access to the financial system using blockchain technology.”

“We understand that big ideas take time, that policymakers and others are raising important questions, and that we can’t do this alone,” Marcus stated.

However, the Committee is likely more concerned by the Swiss-based conglomerate-run Libra Association with access to potentially billions of people’s funds. Indeed, Waters gave a highly critical statement: “With the announcement that it plans to create a cryptocurrency, Facebook is continuing its unchecked expansion and extending its reach into the lives of its users.”

Marcus reiterates that Facebook is a single entity in the Libra Association, and that “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.” There are currently 27 other big name companies involved with Libra with plans for 100 in total.

Next week, David Marcus will testify in front of Waters and her colleagues on the Financial Services Committee, and the Senate Banking Committee regarding Libra and its plans.

In other Libra regulatory news, yesterday Singapore’s Minister of Finance fielded a question on regulating Libra.

The Minister Tharman Shanmugaratnam made clear that Libra would have to comply with financial rules: “Depending on its nature, Libra may be regulated under the [Payment Services] Act, and be subject to requirements on anti-money laundering and countering the financing of terrorism.”

The Payment Services act already regulates cryptocurrencies and other digital payments in Singapore. Shanmugaratnam, though reserved, responds that currently Libra’s details are unclear and he “will continue to engage Facebook on its plans for Libra, and consider appropriate regulatory responses once they are clear. ”

Several other central banks and regulators have aired their views on Libra. They include central bank The People’s Bank of China, The Bank of England, the U.K. financial regulator, the Governor of the Bank of France Villeroy de Galhau, and leading Chinese economist Zhu Min who have all made statements.