Today, the US Senate grilled Facebook’s Chief Libracan about all things Libra.
David Marcus is actually the head of Facebook’s crypto wallet subsidiary, Calibra. He was offered up as a human sacrifice to the US Senate Banking Committee to lay out the Libra project.
Reports are he was able to walk out on his power.
Marcus had the polished demeanor of a patient who had a regular, weekly colonoscopy or a barbed wire enema just to keep his game sharp. At times, I detected a bit of the third-grade-geometry-teacher-helping-one-of-the-slow-kids tone in his voice. Guy was masterful at giving non-answer answers.
In general, the hearings started out as a hate fest with various Senators laying out the case against Facebook as a lazy protector of privacy whose motto is “Move Fast, Break Things.”
The fact that Facebook had just agreed to a $5,000,000,000 fine to the Federal Trade Commission (3-2 vote with the Republicans on the FTC controlling the outcome) for privacy mischief probably contributed to the generally angry-high-school-wrestling-coach reception of guys like Sherrod Brown, Democrat of Ohio.
“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.”
Any key points, Big Red Car?
Yes, of course, dear reader. Dave Marcus scored some points on the education front:
1. You’re really not doing business with Facebook cause they have this nifty Libra Association of 28 members of which Facebook is just going to be “one of the bros.”
OK, so the Libra Association’s charter hasn’t been finalized yet and, sure, all the association members have some dog in this fight, but come on, man.
2. Sure, Facebook has 2,000,000,000 users, but they’re really just a bunch of great guys who want to help the world while following all the rules. Wink. Wink.
If you have 2B users, you only have to get a small percentage of them drinking the KoolAid to make it work.
3. Libra will be headquartered in Switzerland NOT because they have incredible bank secrecy laws, but because Libra is …ahhh… a big idea and needs a global platform to hold an idea that big.
Did I mention that Libra — when they get their Libra Association charter figured out — is going to be transparent AF. Uber transparent. In Switzerland, the home of banking transparency.
4. You will want to hold your Libra cryptocurrency in a secure and safe place like a wallet. To make that possible, Facebook has conveniently created Calibra — a wholly owned Facebook subsidiary to hold your Libra.
But, remember, Facebook is just one of the boys and has no control over the Libra Association. Keep saying that like a yoga mantra.
5. When asked why Facebook and its 2,000,000,000 users would want to create a global currency in the first place, Marcus essentially whispered, “Because we can? And if we don’t do this, some other giant tech company with privacy issues will. So, why not Facebook?”
6. Small/big point on the subject of interoperability — playing nice with other systems in the crypto world. Maybe not. So, the idea of this being a decentralized, hands off system? Not too much.
In the end, it gets down to this — since we can trust Facebook to respect and protect our digital privacy, what could possibly go wrong turning the global money supply and banking system over to them? What?
Regulation, Big Red Car?
The cryptocurrency world has always begged for clear regulation. Something tells me, they are going to have a full stocking well before Christmas.
The problem is that the Chairman of the Federal Reserve, the Secretary of the Treasury, and the President of the United States have publicly expressed dismay at the nature of the crypto economy. Throw in the US Securities and Exchange Commission, and the Internal Revenue Service and you have enough concerned persons to organize a couple bridge games.
The suggestion that Facebook/Libra needs to obtain a commercial bank charter and to be ready for bank-type regulation is a little frightening.