Facebook rejects lawmaker demands to halt cryptocurrency

Financial Times SIGN IN Technology sector Facebook rejects lawmaker demands to halt cryptocurrency Fiery hearing comes as bill considered to ban big tech from operating digital currencies US senators pushed for a moratoriuim on Facebook’s plan to create its own digital money, adding to a chorus of scepticism © Bloomberg July 17, 2019 7:37 pm by Kiran Stacey in Washington and Hannah Murphy in San Francisco Facebook has rejected US lawmaker demands to halt its plans to launch a digital currency, despite two days of bruising hearings in Washington where the scheme was attacked as a threat to users’ privacy, the banking system and national security. David Marcus, the co-creator of the Libra cryptocurrency, told members of the House financial services committee on Wednesday that Facebook would not launch the project until it had sign-off from the necessary regulators. But he would not agree to stop working on the plans, as demanded by several senior members of Congress, or to launch it in a limited pilot project first. Mr Marcus told the committee: “This needs to be analysed and understood, and the proper oversight needs to be set up before Libra can launch.” When pushed to impose a moratorium on the project, he replied: “The commitment is that we will not launch until we have addressed all concerns fully and I think that is enough.” Mr Marcus also fought back against a bill being considered by the committee which would ban Facebook and other technology companies from operating a digital currency. “New legislation keeping technology companies permanently out of digital currency activities would lessen competition and stifle innovation in the US payment system sector, making US consumers worse off than consumers in other countries and making the US payment system companies less competitive with their peers overseas,” he argued. Facebook has encountered huge political resistance since announcing its plan to develop a cryptocurrency, which it says will allow fast and almost cost-free international payments. Donald Trump, the US president, Steven Mnuchin, the Treasury secretary, and Jay Powell, the head of the Federal Reserve, have all expressed concerns about the scheme. Wednesday’s hearing was the second opportunity in as many days for Mr Marcus to publicly explain and defend the project, and followed from his testimony in front of the Senate banking committee the previous day. It was another fiery session, with representatives from both sides warning about the potential implications of the currency for the dollar, the banking system and the privacy of its users. Brad Sherman, the Democratic representative from California, said the project could be more dangerous for American than the 9/11 terrorist attack, adding: “This is a godsend to drug dealers and sanctions evaders and tax evaders.” Mr Sherman also called for Mark Zuckerberg, Facebook’s chief executive and founder, to attend hearings. Recommended Libra: Facebook’s digital currency Ann Wagner, the Republican representative from Missouri, said she was worried about the pace at which Facebook was planning to roll out its project. “I’m concerned that a 2020 launch date demonstrates deep insensitivities around how Libra could impact US national security, the global financial system, the privacy of people across the globe, criminal activity and international human rights,” she said. Other representatives suggested that the new currency, and the Calibra digital wallet which Facebook is also developing, might have to be regulated as strictly as a multinational bank, something Mr Marcus pushed back against. “[We] have no plans to engage in banking activities. And, you know, as far as the Calibra wallet is concerned, we will be active in the payment space like many other non banks are active in the payment space,” the former PayPal executive said. Mr Marcus also repeated his assertion that the Calibra wallet would enforce strict anti-money-laundering standards.