Facebook’s top official overseeing the launch of its Libra cryptocurrency plans to tell U.S. lawmakers the company does not plan to launch the digital currency until regulatory concerns and approvals are “fully addressed.”, according to Reuters.
David Marcus, who oversees Facebook’s blockchain efforts, also plans to vow that Libra is not being built to compete with sovereign currencies or interfere with monetary policy.
“The Libra Association, which will manage the Reserve, has no intention of competing with any sovereign currencies or entering the monetary policy arena,” Marcus will say, according to prepared testimony posted by the Senate Banking Committee. “Monetary policy is properly the province of central banks.”
In a recent article published by David Marcus, the Facebook’s official recognizes that „As expected, there are some questions and a few misunderstandings. From the perspective of regulation, Marcus explained the Facebook plans and came up with the following answer:
„We’re talking about something new, at scale in a very regulated industry, and if this is not done right, it could definitely present systemic risks no one wants. This is why we believe in and are committed to a collaborative process with regulators, central banks, and lawmakers to ensure that Libra helps with the kinds of issues that the existing financial system has been fighting, notably around money laundering, terrorism financing, and more.
At the core, we believe that a network that helps move more cash transactions — where a lot of illicit activities happen — to a digital network that features regulated on and off ramps with proper know-your-customer (KYC) practices, combined with the ability for law enforcement and regulators to conduct their own analysis of on-chain activity, will be a big opportunity to increase the efficacy of financial crimes monitoring and enforcement.
We will – and more importantly, the Libra Association will – continue to engage proactively and openly with all relevant stakeholders on these key issues. Libra should improve detection and enforcement, not set these back.”
The fact is that the rollout of the Libra project is the latest evidence that Facebook is still struggling to wield influence in both Washington and in the European Union. According to politico.com, „Facebook is botching its dream of becoming a new powerhouse in finance, failing to win over lawmakers and regulators who say they are far from ready to allow the social media giant’s ambitious cryptocurrency plans to move forward.”
„The time between now and launch is designed to be an open process and subject to regulatory oversight and review,” David Marcus said. „In fact, I expect that this will be the broadest, most extensive, and most careful pre-launch oversight by regulators and central banks in FinTech’s history.”
Marcus said: „While the initial mechanism by which organizations can run a node and become a member of the Libra Association, is definitely not as open as, say Bitcoin, where anyone can participate in the consensus algorithm, the Libra Blockchain is absolutely designed to be open. What this means is that no one needs to become a member to access the blockchain, and to build services like wallets, or merchant acceptance.
On decentralization — we totally get the point — fungibility of nodes to ensure they can always be replaced over time is a fundamental principle of blockchains, and that’s why we’re committed to gradually transitioning to a permissionless state in the years to come. But it was important to start with trusted entities that could operate in a regulated environment and with the operational expertise required to ensure the integrity of the network in its foundational stage.
I’d argue that one hundred geographically distributed, industry-diverse organizations is quite decentralized. Maybe not enough at equilibrium, but to start. As a comparison, often the concentration of power in the hands of those running software for mining pools on other blockchains is overlooked. But there’s no question that there are more decentralized blockchains available, and that the Libra Association must strive to gradually decentralize it further.”
„Though Libra has met with fierce resistance from central banks and supervisory authorities and might never see the light of day, in many other cases tech firms (both start-ups and established big players) have successfully captured bits and pieces of universal banks’ traditional value chain. This trend may only intensify in the coming years. In this environment, European banks remain squeezed.”