On Tuesday, Facebook’s head of blockchain projects David Marcus appeared before the Senate Banking Committee to explain Facebook’s controversial Libra project. But while the arcane details of blockchain governance were difficult to pin down, the committee quickly zeroed in on a simpler question: Can we trust Facebook to run its own currency?
Sen. Sherrod Brown (D-OH) led off the hearing with a blistering rebuke of the company, putting the new project in the context of a string of scandals ranging from Cambridge Analytica to racial massacres in Myanmar.
“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,” Brown said. “We would be crazy to give them a chance to experiment with people’s bank accounts, and to use powerful tools they don’t understand, like monetary policy, to jeopardize hardworking Americans’ ability to provide for their families.”
Marcus did his best to allay those concerns, laying out a comprehensive plan for how the Libra Association and Calibra wallet would fit into existing financial regulations. He also reassured the committee that, while the Libra Association is headquartered in Switzerland, it will abide by US financial regulations, including registering under FinCEN and abiding by the OFAC sanctions list. “In the US, there are a number of regulators that we’re engaged with,” Marcus told the committee, “and we’re also engaged with the G7 working group that includes finance ministries and central banks.”
Data collection was another sensitive topic. Marcus has generally promised that Facebook will not collect any data from Libra transactions without explicit user permission. At the hearing, he went further, saying that Calibra’s business model was based on partnerships rather than data collection. “I can’t think of any reason right now for us to do this,” he told the committee, referring to permissionned data collection.
But not everyone believed Facebook would pass up the chance to collect data, given the company’s history of voracious optimization fueled by user data. “I’m not reassured by your statement that you can’t see any reason right now that there would be data sharing between these platforms,” said Sen. Tina Smith (D-MN).
The hearing drove home the fact that many in the Senate oppose Facebook’s cryptocurrency plans, but it’s still unclear what they might do to stop Libra. One recently circulated draft bill — titled the Keep Big Tech Out of Finance Act — would place an outright ban on large tech platforms becoming financial institutions, requiring Facebook to either cut ties with Libra or shut down the project entirely. But the bill has yet to be introduced, and it’s unclear whether such a forceful measure could make it into law.
Many of the most difficult questions had to do with the mingling of Facebook and Libra data. Pressed by Sen. Bob Menendez, Marcus declined to commit to notifying users within 48 hours if Facebook and Libra data were commingled, a kind of requirement that would be imposed by a number of tech privacy proposals.
Nonetheless, Marcus insisted Libra was designed to insulate financial data. “The way we’ve built this is to separate social and financial data,” Marcus said, “because we’ve heard loud and clear from people that they want those two data streams separate.”