Social media giant, Facebook’s latest cryptocurrency venture, Libra has been under the grill for quite some time. David Marcus, head of Facebook’s blockchain made it clear that Facebook’s new digital asset is entailed to global monetary policies or regulations just like any other cryptocurrencies and there is no refined scheme that would give Facebook’s token, the power to overthrow regulations.
In a written statement to the Senate Banking Committee, Marcus highlighted that Facebook’s coin might suffer “the most oversight” from central banks and regulators in the history of FinTech. Marcus also announced that the social media giant wouldn’t launch its digital coin without receiving the required approvals. He said,
“I want to be clear: Facebook will not offer the Libra digital currency until we have fully addressed regulatory concerns and received appropriate approvals.”
Last month, Maxine Waters, U.S. Representative, and House Financial Services Chair called for a temporary standstill to the development of Libra, until the lawmakers acquired enough information about the imminent cryptocurrency. The written statement was an assurance that Facebook would comply with the delay demanded by U.S. lawmakers. Soon after this, the U.S. House and Senate scheduled for hearings on July 16 and 17.
Marcus asserted in the statement that Facebook views Libra as a payment tool and not an investment, while some noted that the coin is pegged to various fiat currencies which looked like a mutual fund. Marcus further explained that the intention of pegging Libra to fiat currencies held in banks, shot-term government securities, and other platforms was to protect it from fluctuations. He said,
“People will not buy it to hold like they would a stock or a bond, expecting it to pay income or increase in value. Instead, Libra is like cash.”
Facebook’s intervention into the monetary world has turned quite a few heads as financial leaders fear that Facebook would dominate and disrupt the world’s financial order. However, Marcus affirmed that they neither intend to make Libra a sovereign currency nor compete with other sovereign currencies. Marcus said,
“The currencies represented in the Libra Reserve will be subject to their respective government’s monetary policies—policies those governments will continue to control.”
Since Libra is headquartered in Geneva, Switzerland, the Swiss Financial Markets Supervisory Authority(FINMA) will be Libra’s primary regulator. However, the digital coin will continue to work with U.S. regulators and also intends to register with FinCEN, as a money services business.
According to Marcus, Calibra was set up so that financial service providers can build on Libra, similar to other blockchains. He also stated that the company’s priorities are higher than just acquiring profits, as they intend to address privacy concerns and provide financial services to all rates. He said,
“We do not expect Calibra to make money at the outset, and Calibra customers’ account and financial information will not be shared with Facebook, Inc., and as a result cannot be used for ad targeting.”