Libra Senate and the House hearings preview: the situation in the Senate is acceptable, the House of Representatives is more dangerous

Libra’s Senate hearing and the House hearing were held soon. Through detailed combing, the value of the carbon chain found that the reasons for Libra's parliamentarians were similar (supporting innovation), while the parliamentarians opposed to the Libra project had their own reasons. The reasons for opposition include not only concerns about privacy, concerns about the new financial order, concerns about Facebook's possible control of money supply, and even concerns about Libra's lack of decentralization. What is even more interesting is that although Xiaozha is a supporter of the Democratic Party, the most fierce objection to Libra is the Democrats.

Libra’s Senate hearing and the House hearing were held soon. Although Congress does not have direct ruling and authority over Libra, for Libra, the public opinion of this public discussion will initially adjust the follow-up supervision and game.

The hearing is not the result, but it will affect the final result. Facebook’s financial revolution involving 2.7 billion people is a smooth attack, or it has not yet been born, and these two hearings are crucial.

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Thus, the value of the carbon chain made this prospect.

01

On the 16th and 17th, Marcus will face the two battlefields of the Senate and the House of Representatives.

The Senate hearing was convened by the Senate Bank, Housing and Urban Affairs Committee, a full committee hearing that will be attended by 25 members of the committee. The hearing will be held at 10:00 am Washington time on July 16 (10 pm Beijing time on July 16) with the theme "Reviewing Facebook's Digital Currency and Its Data Privacy."

The House hearing was convened by the House Financial Services Committee, which is also a full committee hearing, with 59 members attending the meeting. The hearing will be held at 10 am on July 17 (10 pm Beijing time on July 17) with the theme "Reviewing Facebook's proposed cryptocurrency and its impact on consumers, investors and the US financial system."

The hearings of the two hearings were David Marcus. He is the former president of PayPal, the head of the Facebook Messenger department, and a member of the Coinbase board of directors. Currently, he is the head of Facebook-sponsored cryptocurrency project Libra.

Before the hearing, the Senate Banking, Housing and Urban Affairs Committee sent a letter to Facebook asking about seven major questions about the Libra project, and Marcus answered the seven questions. The five Democratic members of the House Financial Services Committee jointly issued a joint letter requesting that the Libra project be suspended before the regulatory issues are clarified. It can be said that after the Libra white paper was released, before the hearing, the Senate and the House of Representatives and Facebook had already launched a round of confrontation.

 

02

Prospects: The situation in the Senate hearing is acceptable, the House hearing is more dangerous

According to the value of the carbon chain, among the 25 senators, 9 senators have a positive attitude towards cryptocurrency and blockchain technology, including Mike Crapo (Republican), chairman of the Senate Bank, Housing and Urban Affairs Committee. There are also 10 members who have a negative attitude towards cryptocurrency or Facebook, including Sherrod Brown, the Democratic vice chairman of the Senate Banking, Housing and Urban Affairs Committee. The attitude of the other six members is unclear. It can be said that the Libra Senate hearing on the 16th is half and half of the situation. If Marcus plays better, it may achieve better results.

Among the 59 members of the House of Representatives, a total of 16 members of the House of Representatives have a negative attitude towards cryptocurrency or Facebook. Only six members of the House of Representatives have a positive attitude towards cryptocurrency or Facebook. Others have an unknown attitude. Among the 16 negative-minded members of the House of Representatives, Democrats accounted for 75%, including Financial Services Committee Chairman Maxine Waters and Vice Chairman Carolyn B. Maloney.

There are two points worthy of note in the House hearings. 1. Among the oppositions given by the Democratic Party members, some Members believe that the reason why the Democratic Party lost in the last election, the Russians can't get rid of the public opinion through Facebook. And if Facebook can't protect the security of its own public opinion, let's talk about financial security. 2. Most of the members of the House Financial Services Committee have never spoken about cryptocurrency, Libra, and Facebook. Their knowledge of cryptocurrencies is also scarce. Some of them even confuse Libra with Libor. The lack of professional knowledge of most people and the fierceness of the leading Democrats cast a shadow over the hearing.

More interestingly, a draft last week called the Keep Big Tech Out of Finance Act was submitted to the House Financial Services Committee, which mentions any annual global revenue of more than $25 billion. Technology companies that engage in online public platforms and transactions and connect to third-party businesses will be banned, and violations of the bill will result in a fine of $1 million per day. However, according to the latest report from Reuters, the draft may cause opposition from Republican members, so it is difficult to get enough votes in the House of Representatives. Even if it can pass, the draft still needs to pass the Senate, and there will be a difficult struggle. There is no doubt that this bill is aimed at Facebook's Libra project. It can be said that behind the Libra hearings in the Senate and the House of Representatives, there is a flash of democracy and Republican struggle.

 

03

For Libra, the 10 questions that MPs are most concerned about.

Regarding the hearings of the Senate and the House of Representatives, the value of the carbon chain has sorted out the 10 questions that Members are most concerned about and the answers that Marcus has made, as follows:

1. Can Libra guarantee the privacy and security of users' financial data? (Note: Just before the hearing, US regulators agreed that Facebook would settle the privacy issue with a $5 billion fine. The US government has been investigating allegations that Facebook leaked 87 million user data to British political consultancy Cambridge Analytica. )

Mike Crapo, Chairman of the Senate Banking, Housing and Urban Affairs Committee: "Facebook's Libra project has many problems in the US and global legislators and regulators, including its potential systemic importance, consumer privacy, and data privacy and protection."

Sherrod Brown, deputy chairman of the Senate Banking, Housing and Urban Affairs Committee: "Facebook is too big and too powerful. It has used this power to use user data instead of protecting their privacy. We can't allow Facebook to be unregulated. In the case of a new risky new cryptocurrency from a Swiss bank account."

Jack Reed, a senior member of the Senate Banking, Housing and Urban Affairs Committee, a member of the Military Commission, and a member of the Grants Committee: "I have reservations about Facebook's creation of its own currency. There are already too many questions about the company's lack of privacy protection and data processing. Need to answer. This collaboration raises more questions about money laundering to economic privacy. To some extent, money gains their strength and reliability on the basis of trust. Before spending time and energy on issuing money, Facebook Should focus on solving its shortcomings."

House Democrat Emanuel Cleaver is concerned about Facebook's improper storage of user data and misinformation over the past few years. He said in a statement: "We have seen significant damage to our democratic manufacturing through foreign Facebook's platform through Facebook. This is only through information and advertising. We allow such a large company to start processing millions. Before billions of financial transactions, we must study these issues and ensure that we have the right tools and guardrails to stop terrorists, extremists and/or enemies from using such platforms to harm our country.

For this question, Marcus once replied in the "To the US Senate Letter":

Similar to the widely used cryptocurrencies currently on the market (such as Ethereum and Bitcoin), transactions occurring on the Libra blockchain support the use of "kana", which means that the user's identity is not publicly visible. The Libra blockchain only records transaction-related data that is publicly visible, such as the blockchain address of the sender and receiver, timestamps, and transaction amounts.

The Libra Association itself will not be involved in processing user transactions and will not store any personal data of Libra users. Transactions on the Libra blockchain will be processed and stored by a verifier node or a wallet service provider such as the Calibra Digital Wallet.

The Calibra wallet is still under development and will provide customer support, anti-fraud protection and refunds in the future. In addition, Calibra will set up an anti-fraud and risk management team. Calibra is committed to protecting user privacy by providing simple, easy-to-understand and accessible data management control services. With a few exceptions, Calibra does not share account information or financial data with Facebook or any third party without the customer's consent, including legal and law enforcement or regulatory agencies regarding anti-money laundering or counter-terrorism financing, and Sharing data, etc. for purposes such as sanctions, but Calibra customer account information and financial data are not used to improve Facebook or its social media and instant messaging due to targeted ads in the product.

2. Is Libra implementing monetary policy by itself outside the government's supervision? How much impact will this incident have on the original financial system?

Sherrod Brown, Vice Chairman of the Democratic Party of the Senate Banking, Housing and Urban Affairs Committee: "Now, apart from the complex and risky Wall Street Bank, we also face new risks from large, unregulated technology companies that have a large number of individuals. The data, as far as I know, they intend to implement monetary policy in accordance with their own conditions."

Tom Cotton, chairman of the Senate Economic Policy Subcommittee, Intelligence Committee, and Military Committee, asked whether the regulatory environment of US financial technology companies poses a risk to the health of the industry.

House Democrat Jesús “Chuy” García: “Allowing Facebook to control the money supply is a terrible idea.”

For this, Marcus did not directly answer, but Fed Chairman Powell once said in an interview: "Digital currency is still in its infancy, so basically the Fed is not worried that it cannot implement monetary policy because of cryptocurrency or digital currency." In other words, he believes that Facebook currency has no effect on the Fed’s monetary policy.

3. Is Facebook's power in the Libra system too big? Is Facebook's influence on the entire US too big?

Mark Warner, vice chairman of the Senate Finance, Banking, Budget and Rules Committee and Special Intelligence Committee: "Technology like blockchain helps break the big platform, but we see Facebook using its size to undermine the promise of decentralized technology. He plans to enact legislation in the coming weeks to weaken this dominance.

2020 Democratic presidential candidate, Senator Elizabeth Warren believes that Facebook should be disbanded because it has too much power over many aspects of people's lives.

Tom Cotton, chairman of the Senate Economic Policy Subcommittee, Intelligence Committee, and Military Committee: "The industry status of Facebook's monopoly can be manipulated in markets other than advertising, and we should evaluate this risk in the future."

In response to this question, Marcus said in a response to the Congress: Facebook will not control the Libra network, nor will it control the Libra cryptocurrency and all reserves that support Libra. Facebook is just one of the more than 100 members of the Libra Association and does not have any special rights or privileges. Facebook created a subsidiary, Calibra, which will run the wallet service on the Libra network. Although Facebook, Inc. owns and controls Calibra, it does not capture or view any of Calibra's financial data. There are also many ways to use and access the Libra network, and you can use a range of fully interoperable managed and unmanaged wallets, which means you will be able to pay and receive payments through different company wallets, or use your own Running software wallet.

4. Once the Libra system is established successfully, will it become a brand new big and incomprehensible financial system?

A joint letter from five Democrats in the House of Representatives: "Since Facebook has more than a quarter of the world's population, Facebook and its partners must immediately stop implementing the plan until regulators and Congress have the opportunity to review and take action. During this suspension, we intend to hold a public hearing on the risks and benefits of cryptocurrency activities and to explore legislative solutions. If we cannot stop implementation before we do so, we will face a new Swiss financial system, which is too Big and can't go bankrupt. If these products and services are improperly regulated and not adequately supervised, they can pose systemic risks that jeopardize financial stability in the US and globally. These vulnerabilities can be attacked and concealed by bad actors because others Encrypted currencies, exchanges and wallets already exist."

The five MPs are: Wm. Lacy Clay, Al Green, Stephen F. Lynch, Maxine Waters and Carolyn B. Maloney. They are all Democrats and they all come from the House Financial Services Committee. Maxine Waters and Carolyn B. Maloney are the chairman and vice chairman of the Financial Services Committee. In addition, Maxine Waters is the chairman of the hearing.

For this, Marcus has no direct response. But Fed Chairman Powell said that the existing regulatory structure in the United States does not exactly match Libra, but it does indeed reach a systemic scale. Before addressing some serious concerns, Facebook "cannot advance" plans to build the digital currency Libra.

5. Will Libra affect the effectiveness of the US government's global sanctions?

Trump’s close ally in the Senate, David Perdue, filed a bill asking how the digital currency would affect the effectiveness of US sanctions in the world.

Robert Menendez, a member of the Senate Banking, Housing and Urban Affairs Committee, has strongly condemned cryptocurrencies for issuing coins in Venezuela: "The US Treasury must equip tools and enforcement mechanisms to combat the use of cryptocurrencies to evade US sanctions."

Sherrod Brown, Vice-Chairman of the Democratic Party of the Senate Banking, Housing and Urban Affairs Committee: "We cannot allow Facebook to issue higher-risk new cryptocurrencies from Swiss bank accounts without supervision.

Regarding this issue, a Calibra spokesperson said: "The Libra blockchain will be global, but will be determined by the managed wallet provider where it will operate. Calibra will not be in countries that are subject to US sanctions or countries that ban cryptocurrencies Or use in the area."

6. How will Libra affect the ability of the US dollar to maintain the world's reserve currency?

Trump's close ally in the Senate, David Perdue, asked the Fed chairman how emerging technologies will affect the dollar's ability to maintain the world's reserve currency: "With the cryptocurrency and all technology coming, technology allows us to see how global money is managed, How cash flow is managed and how it might affect our use of the world reserve currency over the past 100 years."

Powell said that no one pays with bitcoin, which is a gold-like value storage tool. The possibility of a cryptocurrency (such as Bitcoin) becoming a reserve currency cannot be ruled out, but it has not yet been seen. He also stressed that the United States should not assume that the status of the dollar as a reserve currency will remain forever.

7. Is Facebook using Libra to raise the stock price?

Catherine Cortez Masto, a member of the Senate Banking, Housing and Urban Affairs Committee, said she is concerned that the company will use blockchains to raise stock prices.

Marcus has not responded to this. But he said in a letter to Congress: "You don't have to believe that Facebook can get revenue from Libra."

8. Will Libra become a channel for financial crime, terrorism and money laundering?

Kyrsten Sinema, a member of the Senate Homeland Security and Government Affairs Committee, proposed the bill: "A working group led by the Minister of Finance to study financial crimes and terrorism, including those who use cryptocurrencies, and to develop regulatory and legislative recommendations to combat these illegalities. activity."

House Democrat Bill Foster believes that total anonymity can attract the use of criminals and money launderers. He said: "If libra is indeed completely anonymous, he wants to know if the judge has the ability to expose the identity behind the fraudulent transaction or reverse the wrong transaction. If this is a truly anonymous and irreversible transaction, I foresee that there will be Great political issues."

House Democrat Juan Vargas has sent a tweet: "We must understand how virtual currency is used to promote drugs and sex trade. Although virtual currency is intended for legitimate purchases, their anonymous appeals make them the preferred method of illegal activity. HR502 Will help Congress find ways to combat these crimes."

In this regard, Marcus wrote in a letter to the Senate: "We accept appropriate anti-money laundering supervision and inspection, and accept appropriate government supervision. Through the newly formed subsidiary Calibra, Facebook will discuss digital wallets with regulators. The problem, the Calibra digital wallet will be built on the Libra blockchain, which is expected to be one of the many competing digital wallets that consumers can use. Our conversations focus on a range of issues, including global anti-money laundering (AML), In the Terrorist Financing (CFT) and Sanctions Compliance Program, Calibra is developing plans to prevent financial crime and further protect consumer and data privacy."

9. Should Libra be regulated according to the ETF?

According to a recent report by the Wall Street Journal, people familiar with the matter said that the Securities and Exchange Commission (SEC) staff is studying whether Libra's structure needs to be included in exchange-traded funds (ETFs). If the US Securities and Exchange Commission decides to identify Libra as an ETF, it would mean that Facebook needs to obtain approval from the regulator to start the Libra cryptocurrency program. Jonah Crane, a senior US Treasury official, said that Facebook did not seem to consider the mechanism and regulatory implications of Libra's inflows and outflows from users, wallets and developers, and thus sparked the attention of the US Securities and Exchange Commission.

This may be one of the concerns of the Senate hearing. Marcus has not responded yet.

10. Can Libra improve the financial situation of families without bank accounts?

Improving the financial situation of American families without bank accounts is one of the topics of concern to senators. This topic may be included in the discussion.

Sherrod Brown, the Democratic vice chairman of the Banking, Housing and Urban Affairs Committee, wants to see encryption and blockchain provide consumers with financial services without bank accounts and other benefits. But he believes that so far, there are few real-world applications, and the number of scams is large.

Tom Cotton, Chairman of the Economic Policy Subcommittee, Intelligence Committee and Military Committee, raised the question: “A FDIC study in 2015 found that 7% of households do not have bank accounts, and 20% of households rely on non-banking for financial products. Can Fintech improve? These data?"

Marcus’s answer to this question is yes. In a letter to Congress, he wrote: "With Libra, anyone with a cheap smartphone and internet connection can safely protect their assets, reach out to the world economy, trade at a lower cost, and Get more financial services over time. We firmly believe that if Libra succeeds, it will be a non-linear change for billions of people who need it most."

Author: Don Han, Chen Fang, Ren Xuan

Editor: Qin Jin

Produced: Carbon Chain Value (ID: cc-value)

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