Throw Facebook on the Barbie
Top lawmakers grilled Facebook (-0.03%) in a tense Senate hearing yesterday, questioning the social network’s plan to launch its own digital currency.
The 15-second backstory: Last month, Facebook unveiled Libra, a cryptocurrency aimed at expanding global financial services. But before Zuck could say “democratize banking,” critics pounced with tough questions for Libra, especially given FB’s prior data troubles.
Which brings us to yesterday
The Senate Banking Committee stuffed Facebook’s blockchain head David Marcus in a crypto locker over the company’s market power and previous mistakes, arguing Libra would only expand Facebook’s online dominance.
Sen. Sherrod Brown: “Like a toddler who has gotten his hands on a book of matches, Facebook has burned down the house over and over, and called every arson a learning experience.”
Sen. Martha McSally: “I don’t trust Facebook...instead of cleaning up your house, you are starting a new business model.”
Marcus: “We agree with all of the concerns.” His other rebuttals?
Facebook is just one of almost 30 firms that would run Libra.
Libra won’t launch until all regulatory concerns are addressed.
Calibra, the Switzerland-based subsidiary running Libra, won’t share users’ financial info with Facebook.
FYI, Marcus did have some allies in the room. “To strangle this baby in the crib is premature,” said struggling novelist and senator Patrick J. Toomey. “I think we should be...considering the benefits and concerns.”
Big picture: These senators join Treasury Secretary Steven Mnuchin, Fed Chair Jerome Powell, and even President Trump on the growing list of Libra skeptics. But the hearing also resurfaced an even bigger question—how will cryptocurrencies be regulated by the federal government?
Looking ahead...Facebook has said it wants to launch Libra in earnest next year. But first it’ll have to testify before the House Financial Services Committee, which is firing up the grill for its hearing later today.