This week, David Marcus, CEO of Facebook subsidiary Calibra is to appear before Congress. On Tuesday he will respond to the U.S. Senate Committee on Banking, Housing and Urban Affairs. And on Wednesday he will appear at the Financial Services Committee of the House of Representatives. His Senate testimony was published today. He talks both about the Libra Association which oversees the cryptocurrency and also Calibra, Facebook’s subsidiary, which will run the Calibra wallet.
The executive states the immediate benefit to Facebook will be to enable Facebook’s 90 million SME businesses to transact more directly with Facebook users. That’s rather than leveraging their financial data.
Marcus starts out focusing on Libra’s purpose. “We believe that Libra can make real progress toward building a more inclusive financial infrastructure. The journey to get there will be a long one, and we recognize that ours has just begun,” Marcus will state. He returns to the “why” more than once.
Plus Marcus plays on the fear factor. “I believe that if America does not lead innovation in the digital currency and payments area, others will. If we fail to act, we could soon see a digital currency controlled by others whose values are dramatically different,” says the former PayPal President.
The Libra Association expects to be supervised by Switzerland’s Financial Markets Supervisory Authority (FINMA) and also to register with FinCEN as a money services business. He also pointed out that if criminal activity switches from cash to Libra, this allows the authorities to trace criminals.
However, Marcus nonetheless separates Libra’s oversight from that of the on and off-ramps (the exchanges, rather than Libra). And he goes on to say that Libra will maintain policies and procedures concerning Anti Money Laundering, but doesn’t say what those might be. However, Marcus states that Libra will commit its considerable technical expertise towards improving procedures. At the end of the testimony, he reiterates that companies which offer services on the Libra Blockchain will need to be regulatory compliant.
Marcus acknowledges the desire of Charmain Powell to review Libra and the fact that the process of examining the cryptocurrency should not be rushed. But he also points out that’s why the white paper was published. Facebook won’t offer Libra until regulatory concerns addressed.
With respect to privacy, the Facebook executive says that the Libra Association will not monetize data on the blockchain and will be subject to Swiss data protection laws.
Turning to the Facebook subsidiary, he says that Calibra customer and account information will not be shared with Facebook. That appears more definitive than previous statements. But in his conclusion he adds the caveat of not sharing data between Calibra and Facebook “unless people agree to permit such sharing.” And Marcus also states data will not be used for ad targeting. However, blockchain addresses are pseudonymous, so if a payment is connected to a user, Facebook will know.
Libra is a basket of currencies initially U.S. Dollar, Euro, Pound and Yen with distributed regulated custodians. The Calibra CEO says Libra will work with Federal Reserve and other central banks to ensure it does not compete with sovereign currencies when it comes to monetary policy.
Given so much has been published already, there’s not a massive amount of new information in the prepared testimony. We’ll have to wait and see whether Marcus reveals more in responses to both houses of Congress this week.