On July 17, Libra's second hearing on social media giant Facebook's encryption project was held at the US House Financial Services Committee. David Marcus, head of the Facebook blockchain and head of the Libra project, responded to questions from parliamentarians.
1, Libra is just a payment tool
Marcus confirmed at the hearing that Lirba is definitely not a security. It may be a commodity, but Facebook prefers to see it as a payment tool like WeChat or Alipay. In addition, in order to build a higher quality payment tool, Libra chose the currency as a reserve instead of a highly volatile digital currency. Its Calibra Encrypted Wallet will also offer payment services like PayPal without providing banking services.
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2, will not start before the problem is solved, but will not stop development
After Libra announced last month, several regulators and legislators called for Facebook to "stop" Libra's development before solving all problems. Marcus made a commitment at the hearing that Libra would not be launched until the regulatory issue was resolved. But he did not promise to stop the current technology development work.
3, Libra does not want to evade US regulation
Faced with questions about the missing AML and KYC content in the Libra white paper, Marcus said that although the Libra Association is located in Switzerland, it will register with FinCEN and comply with all AML and KYC rules. Its encrypted wallet Calibra will also comply with all regulations. He said that Facebook Switzerland set up a company not to evade US regulation.
4, Libra half of the reserve is the dollar
Libra has never disclosed the proportion of legal dollars such as US dollars, euros, pounds, and yen that it supports. At today's hearing, Marcus revealed for the first time that Libra's half of the reserve is in US dollars, so its value will be relatively stable. The proportion of other reserves still needs to be determined after dialogue with intergovernmental organizations such as the G7. Marcus also said that Libra does not want to compete with the US dollar and will not compete with sovereign currencies.
5, Libra is open source software, will not control its code
In the face of a bad history of data protection before Facebook, Marcus said Libra is open source software, it does not belong to Facebook, but belongs to the community. Facebook will give up control of the code and the network. The same is true for Calibra's code, and Facebook and Calibra's accounts are not interoperable, and Facebook does not use its data.
6. Facebook is profitable through advertising and low-cost services
Regarding Libra's profit model, the industry has been speculating that Libra will use the funds of users almost equal to interest-free deposits to make profits through financial means. Marcus said it does work with financial institutions such as banks to provide related services. In addition, advertising using digital currency payments is also one of its future profit models.
7. The trading institution decides Libra's currency exchange fee
When answering the redemption fee for Libra, Marcus said he would work with the bank. The small amount of processing fees incurred is determined by the trading institution. Marcus also said that Libra will even develop a small tool specifically designed to help users file tax returns.