The top Democrat on the Senate Banking Committee said Tuesday that it would be “crazy” to allow Facebook to launch a cryptocurrency payment platform, arguing that the “dangerous” social media company cannot be trusted as part of the global financial system.
Sen. Sherrod BrownSherrod Campbell BrownSenate poised to battle over Biden's pick of big bank critic Biden taps big bank skeptic to for top regulatory post Schumer announces Senate-House deal on tax 'framework' for .5T package MORE (D-Ohio) argued that “Facebook has demonstrated through scandal after scandal that it doesn't deserve our trust” to operate Project Libra, its proposed payment network based on a proprietary cryptocurrency.
“Their motto has been move fast and break things. They certainly have,” Brown said. "They moved fast and broke journalism. They moved fast and helped incite a genocide," referring to the Myanmar military's use of Facebook to incite a genocide against the country's Muslim Rohingya minority group in 2018.
“It takes a breathtaking amount of arrogance to look at that track record and think, 'You know, really what we really ought to do next? Let's run our own bank and our own for-profit version of the Federal Reserve. Let’s do it for the whole world.' "
David Marcus, head of Calibra and a lead on Facebook’s involvement with the Libra Association., acknowledged that "there were serious legitimate concerns" expressed by top Washington officials and that he "will commit again to do what it takes to address these concerns."
"And if those concerns are not addressed, and if the regulatory oversight is not appropriate, then we will not launch until it is," Marcus continued.
Brown’s scathing criticism, delivered during the opening of the Banking Committee’s hearing on Project Libra, highlights the depth of the skepticism and distrust surrounding Facebook as the social media giant eyes the financial services industry.
Lawmakers and regulators in both parties have expressed serious concerns about how Facebook’s massive network and series of privacy breaches could influence the global financial system.
Facebook agreed to a $5 billion settlement last week with the Federal Trade Commission over a slew of consumer protection and privacy violations after being penalized for similar charges by the regulator in 2011.
Libra will be run by a Swiss nonprofit separate from Facebook and backed by dozens of major corporations, including the social media company. But Facebook will also operate Calibra, a digital wallet for the Libra system, through a subsidiary company, raising concerns about potential connections between the social network and payments system.
Sen. Mike CrapoMichael (Mike) Dean CrapoThe Hill's Morning Report - Presented by Alibaba - Biden jumps into frenzied Dem spending talks GOP senators say Biden COVID-19 strategy has 'exacerbated vaccine hesitancy' The Energy Sector Innovation Credit Act is an industry game-changer MORE (R-Idaho), chairman of the Banking Committee, said he wanted greater detail on how Libra would comply with anti-money laundering laws, protect consumer privacy and handle data and user information from Facebook.
Rep. Maxine WatersMaxine Moore WatersThe Hill's 12:30 Report - Presented by Facebook - Arizona recount to show Trump's loss by even wider margin Biden criticizes treatment of Haitians as 'embarrassment' The Memo: Biden's immigration problems reach crescendo in Del Rio MORE (D-Calif.), chairwoman of the House Financial Services Committee, has called on Facebook to suspend Libra until regulators and lawmakers are satisfied. She’s also circulating a bill that would ban the project all together.
Federal Reserve Chairman Jerome Powell said last week that Facebook poses “serious concerns” for the global economy and financial stability, and may need to be placed under strict federal supervision.
And Treasury Secretary Steven MnuchinSteven MnuchinThe Hill's Morning Report - Presented by Alibaba - Biden jumps into frenzied Dem spending talks Former Treasury secretaries tried to resolve debt limit impasse in talks with McConnell, Yellen: report Menendez, Rubio ask Yellen to probe meatpacker JBS MORE said Monday that he too fears how Libra and other cryptocurrencies could be used for illicit finance and money laundering.
Marcus told lawmakers that Libra and its governing body, the Libra Association, were designed to be independent of Facebook and sought to distance the payments system from the social network.
But Marcus ceded that Facebook must "work hard" to earn the trust for lawmakers Libra to be successful.
Other senators appeared more receptive to Libra and warned against efforts to snuff it out before it could even develop.
"It strikes me as wildly premature for us to come to the conclusion that we have to act now to prevent what could be a very constructive innovation in financial services," said Sen. Pat ToomeyPatrick (Pat) Joseph ToomeyBlack women look to build upon gains in coming elections Watch live: GOP senators present new infrastructure proposal Sasse rebuked by Nebraska Republican Party over impeachment vote MORE (R-Pa.)
"I think there are tremendous potential benefits in blockchain technology and cryptocurrencies."
Sen. Catherine Cortez MastoCatherine Marie Cortez MastoAdam Laxalt to be called to testify in trial of Giuliani associate Former Sen. Heller to run for Nevada governor Top Hispanic group endorses Cortez Masto for reelection MORE (D-Nev.) added that Libra is "exciting" and "very innovative for all of us" before seeking clarity on how the system would comply with federal anti-money laundering and illicit finance regulations.
Updated at 3:08 p.m.