Facebook Libra person in charge hearing testimony: will not launch (full text)

Facebook Libra person in charge hearing testimony: will not launch (full text)

The following is the testimony of Marcus's hearing:

First, the introduction

President Crabpo (Mike Crapo, Chairman of the US Senate Banking Committee), senior member Brown, and members of the committee, thank you for the opportunity given me today. I am David Marcus, head of Facebook Calibra (Digital Wallet). For most of my life, I am an entrepreneur working on products designed to improve people's lives. During my career, I have led a business that has been regulated in areas such as telecommunications and financial services. After PayPal acquired my last startup, I became the president of PayPal. About five years ago, I joined Facebook, operated the Messenger business, and recently led our blockchain business.

I am grateful to have the opportunity today to talk to you about Libra's vision. Libra's goal is to develop a safe, low-cost way to effectively transfer money around the world. We believe that Libra can make real progress in building a more inclusive financial infrastructure. The journey to get there will be long and we realize that our journey has only just begun.

Chairman Powell (Jerome Powell, Federal Reserve Chairman Jerome Powell) has made it clear that reviewing Libra's process requires patience, not a hasty implementation. We strongly agree with this, which is why we published a white paper introducing the Libra project. During the period from now to the future, it is an open process and is subject to supervision and review. In fact, I expect this to be the most extensive and cautious “pre-marketing” regulation that regulators and central banks will conduct in the history of financial technology. We know that we need to take the time to get this done. Here, I want to be clear: Facebook will not introduce Libra digital cryptocurrency until we fully address regulatory concerns and get proper approval.

Before I discuss it further, I would like to take a moment to thank the other 27 companies for joining us on this journey, including companies in the payments, technology, telecommunications, blockchain and venture capital industries, as well as non-profit organizations. We are happy to have each of these organizations as partners, and we look forward to working with them and others to make Libra a reality.

We treat all these efforts with humility and are committed to engaging with experts in legal, financial, economic, security, compliance and blockchain technologies, as well as regulators and policy makers responsible for the stability and security of our financial system. At the same time, we also know how important it is to start this journey now. Since publishing our white paper on Libra, I have received letters from people around the world and are excited about the possibilities offered by Libra. For many people, the current financial system may not work. For people around the world, transfers can be too expensive. We believe that Libra can provide a more efficient, lower cost, and safer alternative.

I am excited about the potential that Libra has, and I am proud of Facebook’s efforts in the United States. I believe that if the United States does not lead innovation in the digital currency and payment arena, other countries will. If we don't take action, we may soon see a digital currency that is controlled by people with very different values. I believe that Libra can make a positive difference for many people who benefit from it. I also believe that it can provide a leading opportunity that is consistent with our shared values.

Second, the structure and management of Libra

I would first like to discuss the vision of Libra, Libra Reserve and the Libra Association, and why it is working with governments, multilateral organizations and industry to implement this vision and to help achieve a global financial system that is cheaper, more accessible and more connected. A huge leap.

Libra is designed to be a digital native currency that can be used around the world. Libra brings together the attributes of the world's best currencies: stability, low inflation, wide availability and interchangeability. Technological innovations provide people with the tools to connect and communicate. But while people can send texts, videos, and photos to each other, in many cases they can't easily transfer value between each other. Economic empowerment is one of Facebook's core values, and the 90 million companies that communicate with customers on the Facebook platform can prove this. We have done a lot of work for the free and unrestricted exchange democratization of billions of people. We want to help digital currencies and financial services achieve the same goal, but there is one key difference: we will give up control of the networks and currencies we help create.

Libra is a payment tool, not an investment. People don't buy it as they buy stocks or bonds, and expect it to pay or add value. In contrast, Libra is more like cash. For example, people use it to send money to family members in other countries, or to buy things.

Libra Reserve: Libra's financial structure

Unlike existing stable currencies (by “linked to a single asset” to minimize fluctuating digital currencies), Libra does not have a fixed value in any real-world currency. Instead, Libra will be fully supported on a one-to-one basis through Libra Reserve, which will hold a basket of currency security assets such as cash bank deposits and high liquidity short-term government securities. These currencies will include the US dollar, the pound, the euro and the yen. This approach will minimize the risk of fluctuations in individual regions and provide further stability to people around the world who can rely on Libra to meet their day-to-day financial needs.

The assets in Libra Reserve will be held by a geographically distributed network of regulated custodians with investment-grade credit ratings to provide high auditing capabilities and transparency, security and dispersion of assets. These custodians are well versed in how to properly hold billions or even trillions of dollars worth of assets. Because Libra will be supported by Libra Reserve, anyone using Libra should have a high level of confidence that they will be able to sell it to local legal currency at the exchange rate, just like changing one currency to another when traveling. same.

Monetary Policy

The currency in Libra Reserve will be subject to the monetary policy of their respective governments, which will continue to control these policies. The Libra Association, which manages Libra Reserve, does not intend to compete with any sovereign currency or enter monetary policy. It will work with the Federal Reserve and other central banks to ensure that Libra does not compete with sovereign currencies or interfere with monetary policy. Monetary policy still belongs to the central bank.

Libra Association's partners and supervision

Overseeing the Libra Blockchain and Libra Reserve will be an important task and responsibility that no single organization can do or should be solely responsible for. We believe that the way of cooperation is guaranteed and necessary. Therefore, we are working hard to develop the Libra Association: an independent membership organization.

The first organizations (classified by industry) that will jointly complete the association's charter and become “founding members” upon completion are as follows:

Payment: Mastercard, Mercado Pago, PayPal, Payu (Naspers' Financial Technology Division), Stripe and Visa

Technology and Markets: Booking Holdings, eBay, Facebook/Calibra, Farfetch, Lyft, Spotify, and Uber

Telecom: Iliad and Vodafone

Blockchain services: Anchorage, Bison Trails, Coinbase and Xapo

Venture capital: Andreessen Horowitz, Breakthrough Initiatives, Ribbit Capital, Thrive Capital and Union Square Ventures

Non-profit and multilateral organizations and academic institutions: Creative Destruction Lab, Kiva, Mercy Corps, and Women's World Banking

Each member of the Libra Association – a diverse global group of companies, non-profit organizations, NGOs, multilateral organizations and academic institutions – will be the representative of the Libra Association Council. Through the Council, the Association will be responsible for managing the Libra Blockchain. It will oversee the development of blockchain protocols and networks and will continue to evaluate new technologies that enhance the privacy of blockchain, while also taking into account practicality, scalability and regulatory impact. It will also serve as the governing body for managing Libra Reserve. All decisions will be made in a democratic and transparent manner. To ensure diversity of membership, the association will work to eliminate as many financial barriers as possible so that a large number of non-profit and multilateral organizations, social influence partners and universities can join.

The Facebook team has led the creation of the Libra Association and Libra Blockchain and will continue to lead in 2019. However, once the Libra Network is launched, Facebook and its affiliates will have the same privileges, commitments and financial obligations as any other founding member of the Association. We hope to have about 100 such members before the Libra Blockchain launch. As a member of many members, Facebook's role in association governance will be equal to that of its peers. Facebook has only one vote and cannot control this completely independent organization.

Third, the impact on business, Libra users and consumers

Regulatory supervision and financial stability

The Libra Association is committed to working with policy makers and regulators to achieve a secure, transparent and consumer-friendly Libra implementation. The association recognizes that blockchain is an emerging technology and policymakers must determine how this technology will fit into the regulatory framework.

The regulatory framework for digital assets is beginning to emerge in the US and internationally. The Libra Association will continue to work with regulators and policy makers to ensure they comply with all applicable legal and regulatory requirements.

In the past year, federal regulators have repeatedly emphasized their commitment to promoting innovation. This is a common fact, as can be seen from the Ministry of Finance report on financial technology and innovation. The same is true with the use of new technologies to support compliance with anti-money laundering (AML), counter-terrorism financing (CFT) and sanctions regulations. The US Treasury Department's Financial Crimes Enforcement Network (FinCEN), the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), and the National Credit Union Association have joined forces to emphasize that new technologies are helping large and small companies meet their AML/CFT and sanctions compliance obligations. Can play an important role. The Libra Association is committed to this responsibility and puts a considerable amount of its technical expertise into this task.

It should be noted that the Libra Association expects it to be licensed, regulated, and supervised. As the association is headquartered in Geneva, it will be supervised by the Swiss Financial Market Supervisory Authority (FINMA). We have had a preliminary discussion with FINMA and look forward to engaging them with the appropriate regulatory framework for the Libra Association. The association also intends to register as a money service company at FinCEN.

Anti-money laundering, bank secrecy laws and other law enforcement and national security issues

The Libra Association is also committed to supporting the efforts of regulators, central banks and legislators to ensure that Libra helps combat money laundering, terrorist financing and more. A shift to more cash transactions (where many illegal activities take place) to a regulated digital network will provide opportunities to improve the effectiveness of financial crime monitoring and enforcement. The Libra Association will continue to engage actively and openly with all relevant stakeholders on these key issues. Libra should improve detection and enforcement rather than let them go backwards.

The Libra Association will also support policies and procedures related to AML and bank secrecy laws, combating terrorist financing, and other national security-related laws, and members who are selected to provide financial services on the Libra network will also be required to comply with these laws. .

Protect the privacy and security of personal information

Protecting consumers and protecting people's privacy is one of the top priorities of the Libra Association. The association is committed to working with regulators, which are exploring the application of relevant laws to distributed ledgering techniques.

The privacy on the Libra Blockchain will be similar to the existing blockchain. The transaction only includes the sender's and recipient's public address, transaction amount, and timestamp, and no other information is displayed. The association does not hold any personal data of people who use the blockchain, no matter how it is collected, nor does it run any infrastructure. Therefore, the association cannot and will not monetize the data on the blockchain. To protect data and privacy, the Swiss Federal Data Protection and Information Specialist (FDPIC) will be the Libra Association's privacy regulator.

Fourth, the structure and management of Calibra

Because Libra Blockchain will exist as an open source ecosystem, businesses and developers around the world can freely build competitive services on top of it. And Facebook intends to be a member of many companies. To this end, we recently announced the formation of Calibra, a subsidiary of Facebook, whose goal is to provide financial services using Libra Blockchain. The first product that Calibra intends to launch is Libra's digital wallet, which will be available in Messenger and WhatsApp, and will also be available as a standalone application. The Calibra wallet allows users to send Libra to almost anyone with a smartphone, similar to how they send text messages, at a very low cost or even zero. We anticipate that the Calibra wallet will eventually become one of the many services available to consumers on the Libra network and one of the many digital wallets.

We don't expect Calibra to make money from the start. Calibra customers' accounts and financial information will not be shared with Facebook and therefore cannot be used for ad targeting. Our first goal is to create utility and promote adoption by consumers so that people around the world—especially those without a bank account and those with insufficient banking services—can participate in the financial ecosystem.

But we expect Calibal wallet to be immediately beneficial to Facebook in a wider range, as it will allow many companies in the 90 million SMBs on the Facebook platform to deal more directly with many Facebook users, we hope this Will lead consumers and businesses to use Facebook more. The increase in usage may bring more advertising revenue to Facebook.

Fifth, the impact on consumers and Calibra wallet users

Regulatory supervision and financial stability

Companies offering services on Libra Blockchain will need to comply fully with the laws and regulations of their jurisdiction, including the Calibra Wallet. One of the reasons why Calibra was founded as a Facebook subsidiary is that it will provide financial services and will be regulated accordingly. Calibra Wallet will comply with FinCEN's rules regarding its AML/CFT program and the rules set by the Office of Foreign Assets Control (OFAC) for financial sanctions. State financial regulators will regulate Calibra as a transfer tool, and the Federal Trade Commission (FTC) and Consumer Financial Protection Agency (CFPB) will monitor consumer protection and data privacy and security issues. Calibra has applied for a state currency transfer permit in the United States, and it is also registered as a money service company at FinCEN.

Anti-money laundering, bank secrecy laws and other law enforcement and national security issues

Similarly, Calibra will comply with the Bank Secrecy Act and will integrate KYC and AML/CFT methodology used throughout the world, including those focused on customer identification and verification, and risk-based customer due diligence. At the same time, the development and application of advanced machine learning and other technologies to strengthen transaction monitoring and suspicious activity reports.

Protect the privacy and security of personal information

Calibra was designed with a commitment to protecting customer privacy. Calibra believes that customers have the right to their data and should have simple, understandable, and accessible data management controls. Calibra does not share personal customer data with the Libra Association, and Calibra does not receive other identifiable user data from the Libra Association anyway. In addition, unless there are limited circumstances, such as preventing fraud or criminal activity and complying with the law, Calibra does not share customer account information or financial data with Facebook unless people agree to such sharing. Calibra customer account information and financial data will not be used to improve Facebook's advertising targeting.

Conclusion

Libra's goal is simple: a digital currency built on a secure and stable open source blockchain backed by real asset reserves and managed by an independent association. We want to create more opportunities for easy access, cheaper, and more open financial services, no matter who you are, where you live, what you do, or how much you have. We recognize that the road to achieving this goal will be long and it will not be achieved in isolation. That's why we've started to promote Libra's vision, and why we've been discussing it and will continue to discuss it with companies, non-profits and multilateral organizations, academic institutions, and policy makers, central banks, and regulators from around the world. How to achieve this goal most effectively. We recognize the authority of financial regulators and support their supervision of this project. (Tencent Technology)