REUTERS/Erin Scott
David Marcus, head of Facebook's Calibra (digital wallet service), testifies before a Senate Banking, Housing and Urban Affairs Committee hearing on "Examining Facebook's Proposed Digital Currency and Data Privacy Considerations" on Capitol Hill in Washington, U.S., July 16, 2019.
- David Marcus, the Facebook executive heading the firm's cryptocurrency efforts, says that the system is designed in such a way that it doesn't matter whether or not you trust Facebook.
- That's because it's the Libra Association, which was formalized on October 14, that's tasked with governing the network, not Facebook.
- He also reiterated that the currency will not launch until it meets the proper regulations and the association has had the chance to address lawmakers' concerns.
- The comments come as Facebook's cryptocurrency plans have come under intense scrutiny from regulators, who have urged the social giant not to move forward with the project.
- A number of Facebook's launch partners recently backed out of the project after facing pressure from officials, such as Stripe, Visa, and Mastercard among others.
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WASHINGTON, DC - Facebook's ambitious plan to launch a new digital currency, known as Libra, seemingly began to unravel earlier this month when several of its founding members - including major players in the personal finance and payments industries like Visa, Mastercard, and Stripe - backed out of the project.
The initiative has attracted heavy scrutiny from lawmakers who questioned how Facebook's currency will be regulated and whether the company should be trusted to develop its own currency given its history of privacy scandals. But Facebook hasn't faltered - instead, it held a meeting in Geneva, Switzerland, on October 14, where the remaining 21 members of the association met to formalize the council and elect a board of directors.
And according to David Marcus, the head of the Facebook subsidiary Calibra that is leading the project, whether or not you trust Facebook doesn't matter. Marcus pointed to the fact that the Libra Association (of which Facebook will just be another member) will bear the burden of making key decisions when it comes to how the system is governed, and noted that the technology that it's built on is open-sourced, meaning anyone can use it.
"We want to design this network in such a way that whether you trust or not Facebook is irrelevant to this venture," Marcus said when speaking with a small group of journalists on Monday. "Because it solves real problems for real people. And if you don't want to trust Facebook, you'll have 100 other different wallets to choose from. And at the network level, we won't control it. So trust Facebook or not, it won't matter."
The association will undoubtedly have to combat heavy skepticism from regulators moving forward. Chairwoman of the House Financial Services Committee Maxine Waters and other Democrats have urged Facebook to cease plans to implement the currency until regulators can examine concerns and take action. The committee grilled Marcus in July on a range of issues, including how the currency would be regulated and whether or not Facebook's role in creating the system and implementing a wallet for it in its own apps would give it too much power.
That notion isn't lost on Marcus, who again reiterated that the technology is open-sourced and free, and that the network will be governed by the association, not Facebook. "If that doesn't tell you that we're keenly not tone deaf and actually quite aware of the realization that Facebook - or for that matter any other company - should not control a network that is central to moving money around the world, then I don't know what does," he said.
When Marcus testified in front of the House Financial Services Committee in July, lawmakers seemed uncomfortable with Facebook's ambitions to launch a new cryptocurrency as early as next year given the many unanswered questions about how it would be regulated. But Marcus said that while a 2020 launch is still the goal, it will entirely depend on whether or not the proper regulatory framework is obtained.
"We're not going to launch this thing until it gets the proper licensing regime and oversight for approach and we've had a chance to address the legitimate concerns that were raised," he said. "It will take the time that it will take, but I still hope that 2020 is an option."
That 2020 goal, he says, will hopefully be a motivating factor to speed up discussions and make progress.
"If you're announcing something like this and you're saying we'll see whenever it happens, it doesn't work," he said. "So you have to focus everyone on a clear deadline so you can get things done."
Moving forward, the governing power will rest in the hands of the association - not Facebook. However, that doesn't mean Congress will stop looking to Facebook for answers. Facebook CEO Mark Zuckerberg will testify before the House Financial Services Committee on October 23, to discuss the social giant's impact on financial services and housing sectors, and questions about Libra will likely come up.
But since its the association that's tasked with governing Libra, it's unclear exactly how much insight Zuckerberg will be able to provide. "He'll be free to talk about why he thought it was a good idea to build this and the intention behind it," Marcus said.
Marcus hasn't been discouraged by the level of scrutiny Libra has faced nor the fact that several key partners have already dropped out. When asked whether he had approached other large tech firms like Apple, Google, and Amazon about joining the association - to which he responded that they've had "very open conversations with a lot of those companies" and many others - Marcus said having partners join so early on is a good thing. It shows that they know what they're getting into, and are motivated to see it through regardless.
"Only companies that are really motivated to making this happen will have the fortitude and the courage to carry on," he said.