United States lawmakers have again bashed Facebook over its planned cryptocurrency, after a bruising first bout a day earlier, when senators from both parties condemned the project and said the company had not shown it could be trusted.
The social media company on Wednesday continued fighting to get Washington on its side after it shocked regulators and lawmakers with an announcement on June 18 that it was hoping to launch a new digital coin called Libra in 2020.
Facebook has faced criticism from policymakers and financial watchdogs at home and abroad, with critics fearing that widespread adoption of the digital currency by Facebook’s 2.38 billion users could upend the global financial system.
“We’re told by some that innovation is always good,” said Democratic US Congress Representative Brad Sherman at the House Committee on Financial Services hearing, before making a comparison bordering on the absurd.
“The most innovative thing that happened this century is when Osama bin Laden came up with the innovative idea of flying two airplanes into towers,” Sherman said. “This may do more to endanger America than even that.”
While many lawmakers aired concerns and scepticism about the project, several Republicans argued the government should not be reflexively opposed to new ideas from the private sector. They noted Libra could produce significant benefits for people lacking traditional banking services.
“We should presume that innovation is good, it presents enormous opportunity,” said Republican US Representative Andy Barr.
Sherman repeatedly insisted that Facebook CEO Mark Zuckerberg testify before the committee, as lawmakers questioned David Marcus, the Facebook executive overseeing the project.
Marcus had already been grilled by the Senate banking committee on Tuesday over the possible risks posed by Libra to data privacy, consumer protections and money laundering controls. But Wednesday’s hearing proved even more tense.
“I have serious concerns with Facebook’s plans to create a digital currency and digital wallet,” Maxine Waters, the committee chairperson, said in her opening remarks.
“If Facebook’s plan comes into fruition, the company and its partners will yield immense economic power that could destabilise currencies.”
The panel has already circulated draft legislation that could kill the project by banning Facebook and other tech firms from entering the financial services sector.
Democratic US Representative Carolyn Maloney pushed Marcus to commit to a Libra pilot program that had one million users and was overseen by US financial regulators, including the Federal Reserve.
“I don’t think you should launch Libra at all,” Maloney said. “At the very least you should agree to do this small pilot program.”
Marcus, who was president of PayPal from 2012 to 2014, did not commit to a pilot, but tried to assuage lawmakers by pledging not to begin issuing Libra until regulatory concerns had been addressed.
“We will take the time to get this right,” Marcus said.
The Facebook executive told Congress the company had unveiled the project at an early stage in order to get feedback from all stakeholders.
But members of the US House on both sides of the aisle asked how Facebook will prevent the cryptocurrency from being used for illicit activities.
“I’m concerned a 2020 launch date represents deep insensitivities about how Libra could impact US financial security, the global financial system, the privacy of people across the globe, criminal activity and international human rights,” said Republican US Representative Ann Wagner.
Facebook has said its digital wallet subsidiary, Calibra, will be carrying out compliance checks on customers who want to sign up.
Lawmakers are concerned about the impact Facebook’s entry into financial services through Libra could have on financial stability more broadly, and how the company will protect users’ payment data.
Facebook has been on the defence amid a backlash over mishandling user data and not doing enough to prevent Russian interference in the 2016 US presidential election.