U.S. Sen. Mike Crapo, the chairman of the Senate committee on banking, housing and urban affairs, while aware of the risks associated with the project, did note he believes the initiative's intentions are laudable. If executed properly, he said, it could be beneficial to billions of individuals lacking traditional banking.
“If done right, Facebook’s efforts to leverage existing and evolving technology and make innovative improvements to traditional and nontraditional payments systems could deliver material benefits, such as expanding access to the financial system for the underbanked, and providing cheaper and faster payments," Crapo said in his prepared remarks.
Crapo also pointed out that a number of regulatory agencies have already thrown up red flags ahead of the project's launch. Secretary of the Treasury Department Steven Mnuchin issued a warning that Libra, Calibra's designated currency, could be used by terrorists and launderers. In fact, Mnuchin himself issued a statement dealing with the matter. Said the treasury secretary: "The United States has been at the forefront of regulating entities that provide cryptocurrency. We will not allow digital asset service providers to operate in the shadows and will not tolerate the use of cryptocurrencies in support of illicit activities."
According to Crapo's statement, Bank of England Governor Mark Carney has called for the "highest standards" of regulation and protection should the project come to fruition. The Federal Reserve, the U.K. Financial Conduct Authority, G-7 and Financial Stability Board, are among some of the others to weigh in as well. According to Crapo, concerns include, but are in no way limited to:
- How the payment system will work
- How it will be managed
- How Libra, the Libra Association, Calibra and Facebook will all interact
- What consumer protections will apply, and potential implications for consumers with respect to financial loss from fraud or the project’s failure
- How individuals’ data will be protected
- How individuals’ privacy will be preserved;
- How the Libra ecosystem interacts with the Bank Secrecy Act and other existing anti-money laundering regulations
- How Libra could threaten financial stability and the steps that could be taken preemptively to mitigate those risks
For their part, Facebook has assured Congress the project will not launch without the strictest consumer protections standards in place. Marcus assured skeptics Facebook has considered their concerns and will act in good faith. "Libra is about developing a safe, secure, and low-cost way for people to move money efficiently around the world. We believe that Libra can make real progress toward building a more inclusive financial infrastructure," he said in his testimony. "The journey to get there will be a long one, and we recognize that ours has just begun. [Federal Reserve] Chairman [Jerome] Powell has made clear that the process for reviewing Libra needs to be patient and thorough, rather than a sprint to implementation. We strongly agree."
Marcus added all cryptocurrencies in the Libra Reserve will be subject to the monetary policies of their respective government, and the Libra Association, which will be tasked with managing the reserve, does not plan on competing with sovereign currencies. Calibra will be in compliance with the Bank Secrecy Act and " will incorporate KYC and AML/CFT methodologies used around the world," he added.
