How did the first hearing in the US Libra cryptocurrency Senate from Facebook

Facebook will only integrate its own Calibra cryptocurrency wallet into Messenger and Whatsapp applications and will refuse similar third-party initiatives. This was announced by Calibra head David Markus during today's hearing of the US Senate Committee on Banking, Housing and Urban Affairs, writes TechCrunch .

Libra cryptocurrency will be compatible with other wallets, thanks to which users will be able to transfer their funds between them and, if desired, switch completely to a competitor's solution. At the same time, restricting integration into Facebook’s own products can give the company a tangible advantage over banks, PayPal, Coinbase and any other potential developers of cryptocurrency wallets .

Other abstracts voiced by Markus during the hearing :

• The US "unconditionally" should lead the process of forming rules for the cryptocurrency industry in the world;
• “Yes,” Libra will meet all the requirements in the United States and will not start until the doubts of US lawmakers are resolved;
• “You don’t have to trust Facebook”, because it is only one of 28 and potentially 100 or more Libra Associations and will not have special privileges;
• “Yes”, I am ready to receive payment from Facebook in the form of Libra as a demonstration of confidence in the currency;
• Calibra is “not at all” to sell or directly monetize user data. In the case of the provision of additional financial services by third-party organizations, the user will be asked for permission to use his data for the specific purposes indicated;
• The Libra for Facebook profit model will mostly be based on online commerce, which should make a business want to spend money on advertising in social network products.

Unanswered Questions

At the same time, Marcus did not give a direct answer to the question of whether Facebook will collect data on Calibra transactions, for example, when a user purchases goods from third-party companies that they can find through a social network. Marcus only noted that Facebook will allow users to pay for goods with credit cards and other tools along with Calibra. Thus, even if Facebook does not know how much cryptocurrency the user stores in his wallet, the company can still get information about the amount paid and the purpose of the transaction.

Answering the question about how much Facebook spent on creating Libra, Marcus said that his company did not make such assessments. He also did not explain to one of the senators why the Libra Association is called a non-profit organization if it is going to pay a percentage to its members.

In addition, Marcus could not fully clarify how Facebook will resist fraud with Libra if the company is not going to actively exclude questionable developers from the process, which could potentially lead to a repetition of the situation with Cambridge Analytica, only this time the attackers will steal users' money, not their data.

The head of the project said that US residents are likely to be provided with American versions of Libra wallets, which will implement the necessary protection mechanisms. Libra also intends to educate users on how to avoid fraud. At the same time, Senator Kirsten Cinema stressed that low-income users, to whom Libra will be oriented, as a rule, do not have sufficient knowledge and will be especially vulnerable to the actions of intruders.

Senator Robert Menendez asked whether the Libra Association would block assets if it turned out that they were linked to terrorists. Marcus replied that Calibra and other custodial wallets storing user assets on their side could do this, and regulated channels could prevent Libra from being converted to Fiat. This answer, however, does not exclude the possibility that the Libra Association will not be able to stop transfers of terrorist organizations between non-case wallets, especially if the authorities of the countries where such organizations operate refuse to intervene.

Overall, the hearing turned out to be surprisingly orderly, notes TechCrunch. Many senators demonstrated deep knowledge of the principles of Libra functioning and asked the right questions. Marcus was ready to give answers to most of them, with the exception of Facebook's investment in Libra and the protection of user data when carrying out transactions outside the social network services. A number of key concerns, such as money laundering and the financing of terrorism, relate to all technology and cannot be resolved even with the strict rules of Libra.

Publication date 07/17/2019
Share this material on social networks and leave your opinion in the comments below.