tuesday, 16 july of 2019

cryptocurrency

Facebook Libra chief testifies in Congress to explain cryptocurrency

The head of Facebook's blockchain division will appear in Congress Tuesday for the first of two hearings about the social media network's plans to roll out a new digital financial system next year.

David Marcus, head of Calibra, the Facebook subsidiary in charge of the forthcoming Libra cryptocurrency, will testify in the Senate to make a case for the digital currency -- amid concerns from the Trump administration that cryptocurrencies could pose a number of problems, including terrorism. Some federal lawmakers have already drafted plans to block the Libra in the United States.

Facebook announced Libra last month, detailing plans to launch the digital currency next year, with the promise it will allow users to send money around the world for free with the same ease as sending a text message or a photo. It will immediately challenge other blockchain systems like standard-bearer bitcoin.

Marcus will appear Monday before the Senate banking committee, beginning at 10 a.m. EDT. The hearing will be streamed live.

The Facebook division head will laud Libra as an alternative to cash, saying it's primary use is to be sent around the world.

"Libra is a payment tool, not an investment," he said, according to prepared remarks. "People will not buy it to hold it like they would a stock or a bond, expecting it to pay income or increase in value."

Marcus will say the Libra is backed on a one-to-one basis through cash bank deposits, short term government securities and hard currencies, including the U.S. dollar, British pound, euro and Japanese yen. A number of companies have already backed the Libra, including MasterCard, Uber, PayPal and eBay.

Marcus will testify that the time period between now and Libra's planned launch in 2020 will be "an open process" subject to regulatory oversight and review, a period in which concerns about the system will be fully vetted.

"[Federal Reserve] Chairman [Jerome] Powell has made clear that the process for reviewing Libra needs to be patient and thorough, rather than a sprint to implementation. We strongly agree," he wrote. "We know we need to take the time to get this right.

"I want to be clear: Facebook will not offer the Libra digital currency until we have fully addressed regulatory concerns."

U.S. Treasury Secretary Steven Mnuchin said Monday President Donald Trump has concerns about how cryptocurrencies can be misused by "money launderers and terrorist financiers," noting Facebook has "a lot of work to do."

"Cryptocurrencies such as bitcoin have been exploited to support billions of dollars of illicit activity like cyber crime, tax evasion, extortion, ransomware, illicit drugs and human trafficking," he said.

In the House, where Marcus will appear Wednesday, financial services committee chair Maxine Waters wants Facebook to suspend Libra's release until lawmakers first consider a bill that would bar social media and tech companies from setting up their own financial systems.

Titled the "Keep Big Tech Out of Finance Act," the ban would apply to any company with at least $25 billion in annual revenue -- which also offers a web-based marketplace, exchange or platform for "connecting third parties."

Marcus says in his prepared testimony Libra will be supervised by the Swiss Financial Markets Supervisory Authority, and Facebook has already engaged in preliminary discussions about its regulatory framework.

"We recognize that the road to reaching [our] goal will be long, and it will not be achieved in isolation," Marcus wrote. "That is why we have begun publicizing the vision for Libra and why we have been discussing, and will continue to discuss, how best to achieve that goal."

Wednesday, Marcus will appear before Waters' committee.

(Published by,UPI, July 2019)

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