Facebook’s Libra face the heat of senators over its plan for launching their digital currency

Calibra CEO David Marcus appeared before the Senate Banking Committee to address the concerns of regulators and policymakers from around the globe. The senators ripped into Facebook over their past debacles and their intentions behind launching the digital currency Libra. Senator Sherrod Brown asked Facebook to first clean its house before launching a new business model. He said that the company has shown “through scandal after scandal that it doesn’t deserve our trust”

Mr. Brown went onto say that it would be crazy to give a go-ahead to Facebook’s Libra project and let them experiment with people’s bank account. He claimed that given Facebook’s past record, it would be delusional to think that people would trust the social media giants with their hard-earned money when they cannot guarantee the security of their private data which they promise.

 Republican senator Martha McSally stated up front that she does not trust Facebook with their intention.

No one trusts Facebook

The Senate hearing was nothing less of a nightmare for Facebook’s Libra executive David Marcus as all of Facebook’s past misdeeds come back to haunt them. The hearing was less of what libra is and more of why Facebook should be trusted again when they have failed so many times in the past.

Marcus who is the man behind the creation of libra was a Paypal executive from 2012 to 2014, he assured the senators that Facebook won’t go ahead with the launch until all of the concerns of policymakers in the State is addressed. Marcus said, “We know we need to take the time to get this right.”

It would take a miracle for Facebook to convince the policymakers of their intentions behind the launch of the digital currency. The storm started right after the announcement of the project and release of its whitepaper. Regulators around the globe believed the financial working model of the project would run havoc on the existing financial system.

Steven Mnuchin, the  US Treasury Secretary said that he was not comfortable with Libra and the same concerns were voiced by the head of the US Federal Reserve, Jerome Powell last week.

How Facebook plans to resolve the privacy concerns and money laundering issue?

Tuesday’s Senator hearing was dominated by the concerns over user’s privacy and how Facebook plans to prevent money-laundering in its digital currency ecosystem. Mr. Marcus representing facebook agreed that social media giants have a long way to earn back the trust of the community.

Marcus explained the governing structure of Libra stating the role of Libra Association, a Consortium of 28 independent financial and tech firms. Marcus explained to the Senators that Libra Association would be responsible for managing all aspects of the cryptocurrency project, and it would only share user information with Facebook or any third party in special circumstances that too with the user’s consent.

Marcus explained,

“Facebook will only have one vote and will not be in a position to control the association idependentiation, nor will Facebook or the Libra Association position themselves to compete with sovereign currencies or interfere with monetary policy,”

The curious case of Libra and Calibra

While there have been enough explanations on how Libra would be independent of Facebook, the other aspect which is under-discussed is the Calibra wallet services. Calibra would act as the digital wallet for Libra cryptocurrency and would be completely backed by Facebook and its massive digital footprint which should be a bigger concern.

Facebook’s only line of defense on why they should be given a nod for their project is that if they don’t do it someone else would definitely vouch upon the opportunity. And, by someone else Facebook meant the US rivals China.