Recently, U.S. lawmakers pressed Facebook’s Digital Cryptocurrency Libra to be halted. Read on to know more about it…
Recently, U.S. lawmakers pressed Facebook’s top blockchain executive to halt development of the Libra cryptocurrency during a contentious hearing on the project. The US lawmakers attacked Facebook’s upcoming digital cryptocurrency Libra at a Senate hearing calling it “delusional” and “dangerous” and directing Facebook to clean up its house first before launching the new business model. Tech Crunch reported that David Marcus, Head of Facebook subsidiary Calibra, was grilled at the U.S. Senate Banking Committee.
The initiative of Facebook’s Digital Cryptocurrency Libra is far from the first effort of its kind. The best-known cryptocurrency, Bitcoin, is in wide circulation, and it introduced the idea of digital currencies that are free from government control. But the Libra effort has put a spotlight on cryptocurrencies and amplified the voices of critics who say the technology has little value beyond speculative investing and illegal transactions, like online drug sales.
NYT reported that Senator Sherrod Brown, Democrat of Ohio, said at the hearing “Facebook is dangerous,”. He added “Facebook has said ‘just trust us.’ And every time Americans trust you, they seem to get burned.” Marcus was asked about a range of Facebook controversies, from lax protection of the private information of its users to Russian disinformation on Facebook’s platforms to claims that is tries to muzzle conservative viewpoints.
When Facebook announced Libra in June, it also faced immediate skepticism from people who are wary of the power the social media company has already accumulated. Within days, regulators in Washington were calling for hearings on Facebook’s plans.
Damage Control
Facebook has said it is not going to launch its digital coin Libra unless regulators are fully satisfied and all necessary approvals are in place. A separate entity called the Libra Association, whose proposed board would include more than a dozen partners in the tech and financial industries, would manage the cryptocurrency system once it is up and running, which Facebook is hoping to do next year.
Marcus said Facebook “will only build its own Calibra cryptocurrency wallet into Messenger and WhatsApp”. Marcus told U.S. lawmakers that Libra – controlled by a non-profit called the Libra Association — will comply with all US regulations and unless all concerns are answered, would not be launched. But he stopped short of committing to freezing technical work on the project, much to the chagrin of House Financial Services Committee members.
Marcus also provided more detail than before about the makeup of the basket of fiat currencies that would back Libra. He told the lawmakers (several of whom were concerned about Libra’s threat to U.S. financial dominance) that the reserve will “mainly” be backed by the U.S. dollar. The Facebook executive later specified that it would be 50 percent dollars, with euros, British pounds and the Japanese yen also included in the collateral.
The Road Ahead
Under Facebook subsidiary Calibra, Facebook has planned to introduce a digital wallet for Libra. The wallet will be available on Messenger, WhatsApp and as a standalone app and is expected to be launched in 2020.
