Libra will wait for approval from all US financial agencies that regulate various aspects of financial security and stability, said Facebook CEO Mark Zuckerberg, in his first hearing with the US House of Representatives Financial Services Committee.
Zuckerberg admitted he plans to hold back the Libra launch, in his questioning session with rep. Caroly Maloney.
Maloney was also worried Libra would use anonymous wallets, with the potential to transfer Libra anonymously. She added that anonymous transfers, through third-party wallets, would be a national security issue. Zuckerberg stated that Libra would be a fully transparent and regulated channel of payments, with the same standards of AML as other world-class payment systems. Maloney kept insisting Libra could be used with “anonymous wallets”, a concern so far not shared.
Zuckerberg, however, stated that the Libra wallet would have established user identity. He added, however, that he cannot speak on behalf of the entire Libra Association.
As for the partners dropping out, Zuckerberg gave as reasons the regulatory scrutiny, and the fact that Libra was a “risky” project with an uncertain launch.
Zuckerberg was also asked about the potential of end-to-end encryption to cause abuse, as well as the channels that spread illegal content through Facebook. At the same time, Libra created concerns about the need to provide a level of confidentiality to clients.
Facebook’s CEO was reminded of the principle of “move fast and break things” in his session with rep. Nydia Velazquez. She stated her concern that Facebook did not need to “break” the international monetary system, a concern that Libra could become more influential than banks and fiat currencies.
Velazquez also mentioned that the Congress would need to have time and create a new regulatory framework for Libra. Zuckerberg answered in a way that was interpreted as a “no”, hoping to build Libra without new laws introduced. In case the Congress works on a new bill, this could potentially specifically target Libra. Given the overall skeptical attitude of Congress representatives, new legislation could be the end of all hopes for Libra, even harder than satisfying the current requirements of US-based financial service agencies and regulators.
Zuckerberg called for oversight, but Congress has the potential to build new laws and deal with the new threat of digital assets.
