“I’m not sure that we learned too much more new, except now that they’re calling the association an independent association,” Rep. Sylvia Garcia laments.
Could this be the end of the road for Facebook’s digital coin, Libra, or perhaps is it just the beginning? Similarly to congress members yesterday, we are left more confused than we were before Facebook’s CEO Mark Zuckerberg took the stand.
Reactions from lawmakers present at the hearing isn’t one with a lot of hope. In fact, as aforementioned, Rep. Sylvia Garcia stated categorically that they learned nothing new after Zuckerberg’s testimony, leaving the fate of the Libra cryptocurrency more uncertain than before as this hearing was supposed to be some sort of redemption for Facebook’s previous attempt in the same seat.
A Little Backtrack
All regulatory hell broke loose when the social media giant officially announced its interest in the crypto world via the introduction of its virtual coin dubbed Libra. Since then, both local and international regulators have been on deck to ensure Facebook’s native digital currency meets all the necessary requirements before it hits the market. A digital currency from such a tech giant could cause a lot of trouble if not properly handled, they claim.
To satisfy the jury beyond every doubt, top members of the Libra project have been called to testify over the year. With all attempts going down the drain, the House Financial Services Committee decided to have a sit down with the boss Zuckerberg. Alas, things aren’t looking up either.
Back to the Present
After a six-hour testimony, lawmakers were left more confused than they were earlier. As usual, Zuckerberg went on and on about Libra being used mainly for the betterment of the world, with little to no answer to critical questions such as regulation and governance of the virtual currency.
As a matter of fact, one of the many unsatisfied lawmakers, David Kustoff (R-TN), had to cut through his ‘textbook charity speech’ and asked how the digital coin will be monetized. “When you came up with this idea and went to your board of directors, how did you tell them that Facebook could monetize or profit from the creation or use of Libra and Calibra?” Kustoff asked.
Unsurprisingly, Zuckerberg replied, “Well, Congressman, you may not believe this, but that’s actually not the first thing that we talk about at the company. We focus on building services that are going to create value in people’s lives, and we believe that if we do that, that we’re eventually able to get some of the value downstream.”
And just before he insinuated that customers will be compelled to use the currency, Zuckerberg stated:
“The way that this will help Facebook over time is that basically in our ads system, it’s an auction. If you’re a small business, we don’t have a rate that you have to pay — you bid and tell us what the ads are worth to you if you can get customers into your store or if you can complete a transaction.
And what we basically see is when we eliminate friction for a customer buying something from a business, then the value for that business of advertising on our system goes up, so they bid more in the ad system. If we can make that now, in addition to finding businesses that people want to interact with, people can also transact with them directly. I would expect that over time that will lead to higher prices for ads because it will be worth more to businesses so they will bid more on the ads system.”
To express their “disappointment,” Rep. Sylvia Garcia noted that they have learned nothing new except that it is now called an ‘independent firm’ and in her opinion, it can’t be independent “if Facebook has such control and it’s their platform.”
We are yet at a loss for what the lawmakers’ decision is. However, Chairwoman Maxine Waters stated that “We need to get together and we need to basically review what happened here today and make some decisions about how we go forward with the strategy.”
