Hearing Prospects | Bullying Congress White, not saying how to make a profit, what are the loopholes in Libra's congressional testimony?
David Marcus, head of Facebook blockchain subsidiary Calibra, has prepared testimony for tomorrow and the day after tomorrow's congressional hearings. One of the messages is worthy of attention because he explained that the Libra Association will be regulated by the Swiss government because Switzerland is the Libra Association headquarters. location. However, the Libra Association and Facebook's Calibra Wallet will comply with US tax, anti-money laundering and anti-fraud regulations.
According to David Marcus’s testimony, he wrote:
“It is important to note that the Libra Association is expected to be licensed, regulated and supervised. Since the association is headquartered in Geneva, it will be supervised by the Swiss Financial Market Supervisory Authority (FINMA). We have already worked with the Swiss financial market. The Supervisory Authority conducted preliminary discussions and looked forward to engaging them with the Libra Association's appropriate regulatory framework. The Association also intends to register as a money services company with the Financial Crimes Enforcement Network (FinCEN)."
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Previously, Maxine Waters, chairman of the House Financial Services Committee, sent a letter to Facebook and the Libra Association asking them to stop publishing Libra's development work in early 2020, until regulators and Congress have the opportunity to review and take action. David Marus will now defend Libra on July 16 and July 17 before the Senate Banking Committee and the House Financial Services Committee.
The biggest question now is, is the Congressional legislator smart enough and fully aware of Libra? You know, when Mark Zuckerberg, the CEO of Facebook, testified before Congress, the lawmakers raised a lot of incompetent questions and made Mark Zuckerberg easy to resolve. For example, Senator Orin Hatch asked the question at the time:
“How do you maintain a business model where users don’t pay for services?”
As a result, Mark Zuckerberg easily answered with the classic "fake smile":
“Senior, we advertise.”
If the level of knowledge of lawmakers is still at this stage, then it is difficult for them to grasp the real problem of Libra, the "pseudo-decentralized" cryptocurrency.
Perhaps in order to cheer Congress, President Trump had previously sent three tweets on Twitter. In addition to calling it "virtual currency," he said that it has no status or reliability, and if Facebook wants to transform into A bank needs to be regulated like any other traditional financial institution.
In order for Congress to not have to worry about Libra's attempts to replace the dollar or interfere with the core issues of financial policy, David Marcus explained:
“The currencies in Libra Reserve will be subject to the monetary policy of their respective governments, which will continue to control these policies. The Libra Association responsible for managing Libra Reserve is not intended to compete with any sovereign currency or enter monetary policy. It will work with the Federal Reserve and other central banks. Cooperation to ensure that Libra does not compete with sovereign currencies or interfere with monetary policy. Monetary policy still falls within the scope of the central bank."
David Marcus's testimony is very specific and may also quell some of the "hawkish" anger, but most of the issues raised by Congress are expected to be more subjective, similar to "Is Facebook worthy of trust after experiencing the Cambridge analysis scandal?" "This.
There is another problem. Facebook’s launch of this cryptocurrency project is clearly not pure altruism, and David Marcus has never mentioned how to make money from Libra in his testimony. How does the Libra project make Facebook profitable? In fact, Facebook has three main methods:
1. If Libra becomes popular, Facebook can earn interest from Libra reserves, which are made up of traditional currencies and used as collateral for Libra, and interest income could reach billions of dollars;
2. If merchants conduct more business activities through the Internet, we will see a significant increase in Facebook advertising sales revenue, because merchants can accept online payments more easily and cheaply through Libra, so they will be more willing to spend marketing expenses on Facebook. And channels like Google;
3. Calibra may increase additional financial services based on Libra, which may include loans and credits. Facebook can therefore require users to integrate their social network data into Libra for better interest rates while reducing default rates. It can also make greater profits than other peers.
On the evening of July 16th, Beijing time, the US Senate Banking Committee will hold a Libra cryptocurrency project hearing. What will happen tonight? Let us wait and see.
This article from Techcrunch , the original author: Josh Constine
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