Facebook’s Libra project took some heat on Capitol Hill last week as lawmakers took turns expressing concerns surrounding the project. Recently, Libra has been at the focal point of intense debates regarding the future of cryptocurrencies. Luckily, and for the first time in history, many of the lawmakers seem to be able to make a distinction between Libra and Bitcoin.
Facebook Defends Libra
Facebook Executive, David Marcus defended his company’s project in front of a packed Senate hearing on July 17th. Prior to his appearance, he released a prepared testimony in which he explains some of the finer points of Libra.
These points include the fact that the project is to be Swiss regulated. This approach makes sense because the Libra Association is based in Switzerland. Additionally, Swiss regulators welcome large cryptocurrency projects as part of the country’s strategy to remain a major financial hub throughout the digitization of the economy.
In addition to registering with the Swiss Financial Markets Supervisory Authority (FINMA), Marcus explained that the project will also be registered as a money service business with the US Financial Crimes Enforcement Network (FinCEN). While this approach sounds inclusive, lawmakers were not buying it.
Not an Easy Path
The overall tone of the hearing was one of distrust. It appeared as if the government felt threatened by the billion-dollar tech giant’s plans. Even more so, it seemed as if lawmakers were interested in seeing how they could accomplish a similar strategy.
Marcus fielded question after question regarding a host of financial, regulatory, and privacy concerns. When confronted about specifics regarding how Libra intends to prevent illegal activity, Marcus was quick to let lawmakers know that the project has no intention of moving forward until all regulations are met.
This response did little to quell the fears of lawmakers. In the end, it appeared that Congress was still upset about Facebook’s past privacy breaches, and how that information could be used to influence Libra user’s actions. Basically, congress wants Facebook to be, well, less FaceBooky.
Meanwhile, the US Treasury department sounded alarms concerning the use of Libra by money launderers. To this extent, the Treasury wants Facebook to collect even more user information.
One of the most evident takeaways from the hearing was the fact that congress paints the Libra project with a much different brush than Bitcoin. For the first time, lawmakers asked extremely well-educated questions regarding the differences between Libra and other cryptocurrencies.
At one point, Warren Davidson, CoinShares Chief Strategist, was asked to explain the difference between “Bitcoin and Shitcoins.” This is a far cry from earlier cryptocurrency hearings in which lawmakers labeled crypto users as all dark web drug dealers that need to be squashed through intense regulations.
The highlight of the hearing is when Rep. Patrick McHenry stated “The world that Satoshi Nakamoto envisioned and others are building is an unstoppable force. We should not attempt to deter this innovation.”
Libra Gets Congress Thinking
Aside from being attached to Facebook, Libra doesn’t represent a huge technological shift in the market. For example, the consensus mechanism used for the crypto is the same one NEO utilized for the past four years. However, it really looks like Facebook has some serious enemies in Washington that are determined to push back against this project. Luckily, these developments may help lawmakers to see the true benefits of decentralized cryptos such as Bitcoin.