Read the article Facebook Libra will face at the US FSC hearing on Wednesday

The media learned from the pre-session documents that the conference focused on the definition of Libra's nature, the impact of cryptocurrency sales on consumer protection, privacy data protection issues and the emergence of Libra's systemic risks to the entire US financial system. Four important topics.

On July 17, 2019, at 10 am US time on Wednesday, the US Financial Services Commission (FSC) will hold a hearing on the theme "Researching Libra's Libra and its impact on consumers, investors and the US financial system." According to a pre-conference document disclosed by foreign media, the participants included: Libra project CEO David Marcus, Georgetown University Law Center International Economic Law Institute Chris Brummer, Columbia University Law School Comparative Law Professor Katharina Pistor, Gary Gensler, Professor of Global Economics and Management Practice at MIT Sloan School of Management, and Robert Weissman, President of Public Citizen.

On June 18, 2019, Facebook announced plans to develop a new cryptocurrency called Libra (Libra) and a digital wallet that stores the cryptocurrency called Calibra. According to a white paper published by Facebook, Libra will be built on the blockchain, backed by asset reserves and managed by the Libra Association. The association consists of Facebook and other 27 well-known companies including Visa and MasterCard, which purchase assets from the Libra Association including other bank deposits and securities. Libra tokens can only be destroyed when the authorized seller sells the token back to the association to exchange the relevant assets. The white paper shows that interest from Libra's reserve assets will first be used to pay for operating expenses, and then pay dividends to investors using the Libra Investment Token. In addition, Facebook intends to sell Libra tokens to members of the association and other investors to raise startup costs.

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Due to Facebook's own influence and Lida's own HTC background, which has changed the global financial landscape, the news has received a lot of attention from regulators in many countries around the world, especially in the United States where Facebook is located, and it is subject to SEC, CFTC and FSC. Inquiries from multiple regulatory organizations. The meeting on July 13th was organized by the FSC. Just as Federal Reserve Chairman Jerome Powell said in the House Financial Services Committee, Libra expressed serious concern about privacy, money laundering, consumer protection and financial stability. . Chains on Finance, when inquiring about the pre-session documents, learned that the conference focused on the definition of Libra's nature, the impact of cryptocurrency sales on consumer protection, privacy data protection issues and the emergence of Libra's systemic risks to the entire US financial system. Which of these four important topics.

When it comes to the specific identification of Libra's nature, the paper believes that Libra will be recognized as a securities with a high probability based on the US “Hay Test”. Because it will be sold to investors to pay for startup costs and provide them with dividends. Based on the performance of securities and other assets owned by the investment company, but not identical. An exchange-traded fund (ETF) is an investment company that can be redeemed by a fund like a mutual fund, but also allows investors to trade at market prices throughout the day. If an asset is an investment company and is not exempt from registration, it must comply with regulations designed to minimize conflicts of interest, including regularly disclosing its financial status and investment policies to investors. Like ETFs, Libra can also be redeemed through certain authorized resellers and traded on the open market. Although Libra's headquarters will be based in Switzerland, the US federal securities laws stipulate that the sale or use of cryptocurrencies for Americans will still be regulated by the United States.

At the consumer protection level, the paper argues that the sale, exchange or marketing of cryptocurrencies may subject cryptocurrency exchanges or other related businesses to certain consumer protection laws. However, the US Consumer Financial Protection Agency (CFPB) has not yet exercised regulatory power over the cryptocurrency industry, but it is accepting complaints related to cryptocurrencies and stated that consumer financial laws will be enforced where appropriate.

User privacy protection is also a key concern of US regulation. It is worth mentioning that Facebook has been questioned by the US Congress many times because of user privacy protection issues, and may face up to $5 billion in fines. According to the white paper, Facebook has not specified how it intends to obtain user consent, but only that personal data will be shared to combat fraud, for research and data analysis improvements, and in compliance with legal requirements. To access Libra and Calibra, users must provide a valid government status. However, users may not know how to use their data without the clearer consent measures disclosed in the Terms of Service. Cryptographic exchanges are also often the target of cyber attacks and data breaches. To facilitate its cryptocurrency transactions, Facebook intends to manage and maintain a detailed digital repository of social, financial and government data, which may further increase their hacking risk.

Finally, the document also mentions that Libra has banking functions, such as allowing users to deposit, providing loans and requiring users to deposit money, but unlike traditional banks, Libra tokens are not federal money supplies, including dollars or cash. , as well as check and savings account balances. If another currency that is not under government control (such as cryptocurrency) is widely used and feasible, this may have a negative impact on the Fed's monetary policy, as the Fed will lose control of inflation and inflation targets by manipulating cash in the system. The monopoly position, which in turn affects US financial security.

In addition, the chain's previously mentioned KYC issues mentioned in the Libra white paper were published, and the paper also highlighted that Libra did not explain to the outside world how to ensure that users (especially unauthenticated users) are associated with entities. . Second, there are currently no regulations and standards to review new users and transactions for Libra tokens. (Financial Network)

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