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24 hours before Libra's Senate hearing, the hearing testimony of Marcus, the witness of the hearing and the head of the Libra project, was exposed on the official website of the Senate.
In this hearing, Marcus further disclosed the latest progress and information of the Libra project. For example: Facebook will not launch the Libra project until regulatory issues are resolved; Libra's currency basket will include the US dollar, British pound, euro and Japanese yen; the Libra Association is regulated by the Swiss Financial Market Supervisory Authority; the Swiss Federal Data Protection and Information Commissioner (FDPIC) ) will be the Libra Association's privacy watchdog, among other things.
Carbon Chain Value extracted 9 points of the most important information from this hearing statement, which are as follows:
1. Here, I want to be clear: Facebook will not launch the Libra digital cryptocurrency until we have fully addressed regulatory concerns and obtained appropriate approvals.
2. Marcus: I'm excited about the potential Libra has, and I'm proud of Facebook launching this effort in the United States. I believe that if the US does not lead innovation in digital currency and payments, other countries will. If we don’t act, we may soon see a digital currency controlled by others with very different values.
3. Economic empowerment is one of Facebook's core values, as evidenced by the 90 million businesses that communicate with customers on the Facebook platform. We've done a lot to democratize free, unrestricted communication for billions of people. We want to help digital currencies and financial services achieve the same goal, but with one key difference: we will relinquish control of the networks and currencies we help create.
4. Unlike existing stablecoins (digital currencies that minimize volatility by being "pegged" to a single asset), Libra will not have a fixed value in any real-world currency. Instead, Libra will be fully backed on a one-to-one basis through the Libra Reserve, which will hold safe assets such as cash bank deposits and highly liquid short-term government securities in a basket of currencies. These currencies will include the U.S. dollar, British pound, euro and Japanese yen. This approach will minimize the risk from fluctuations in a single region, providing further stability to people around the world who can rely on Libra for their everyday financial needs.
5. Currencies in the Libra Reserve will be subject to the monetary policies of their respective governments, which will continue to control those policies. The Libra Association, which manages the Libra Reserve, has no intention of competing with any sovereign currency or entering the realm of monetary policy. It will work with the Federal Reserve and other central banks to ensure that Libra does not compete with sovereign currencies or interfere with monetary policy. Monetary policy remains the domain of the central bank.
6. The Facebook team has led the creation of the Libra Association and the Libra Blockchain and will continue to lead in 2019. However, once the Libra network launches, Facebook and its affiliates will have the same privileges, commitments, and financial obligations as any other founding member of the Association. We hope to have about 100 of these members before the Libra Blockchain launches. As one member among many, Facebook will play an equal role in the governance of the association with its peers. Facebook has only one vote and cannot control this completely independent organization.
7. To clarify, the Libra Association anticipates that it will be licensed, regulated, and subject to oversight. As the association is based in Geneva, it will be supervised by the Swiss Financial Market Supervisory Authority (FINMA). We have held preliminary discussions with FINMA and look forward to engaging with them regarding the appropriate regulatory framework for the Libra Association. The association also intends to register with FinCEN as a money services business.
9. Calibra was designed with a commitment to customer privacy in mind. Calibra believes that customers have rights to their data and should have simple, understandable and accessible data management controls. Calibra will not share personal customer data with the Libra Association, nor will Calibra receive other identifiable user data from the Libra Association, however collected. In addition, except in limited circumstances, such as preventing fraudulent or criminal activity and complying with the law, Calibra will not share customers' account information or financial data with Facebook unless people consent to such sharing. Calibra customer account information and financial data will not be used to improve Facebook ad targeting.
The following is Marcus' hearing testimony (translated by Tencent Technology):
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1. Introduction
Chairman Mike Crapo, Ranking Member Brown, and members of the Committee, thank you for this opportunity today. I'm David Marcus, head of Facebook's Calibra (digital wallet) business. For most of my life, I've been an entrepreneur building products designed to improve people's lives. During my career, I have led businesses that have been consistently regulated in areas such as telecommunications and financial services. I became President of PayPal after PayPal acquired my last startup. I joined Facebook about five years ago to run the Messenger business and most recently lead our blockchain business.
I am grateful for the opportunity to speak with you today about Libra's vision. The goal of Libra is to develop a secure, low-cost way for people to move money efficiently around the world. We believe Libra can make real progress toward building a more inclusive financial infrastructure. The journey to get there will be long, and we recognize that our journey has only just begun.
Chairman Jerome Powell (Federal Reserve Chairman Jerome Powell) has made it clear that the process of reviewing Libra will require patience rather than hasty execution. We very much agree with this, which is why we published a white paper introducing the Libra project. The time between now and the future official launch is an open process, subject to oversight and review. In fact, I expect this to be the most extensive and careful “pre-launch” oversight ever undertaken by regulators and central banks in fintech history. We know we need to take the time to get this right. Here, I want to be clear: Facebook will not launch the Libra digital cryptocurrency until we have fully addressed regulatory concerns and received appropriate approvals.
We approach all of these efforts with humility and a commitment to engage with legal, financial, economic, security, compliance, and blockchain technology experts, as well as regulators and policymakers responsible for the stability and security of our financial system. At the same time, we also know how important it is to start this journey now. Since publishing our white paper on Libra, I've heard from people around the world excited about the possibilities Libra offers. For many, the current financial system may not be working. Transferring money can be too expensive for people around the world. We believe that Libra can provide a more efficient, lower cost, and safer alternative.
I'm excited about the potential that Libra holds, and I'm proud of Facebook for launching this effort in the United States. I believe that if the US does not lead innovation in digital currency and payments, other countries will. If we don’t act, we may soon see a digital currency controlled by others with very different values. I believe that Libra can bring about positive change for the many people who will benefit from it. I also believe it can provide an opportunity to lead that aligns with our shared values.
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2. The structure and management of Libra
I would like to start by discussing the vision of Libra, the Libra Reserve, and the Libra Association, and why working with governments, multilateral organizations, and industry to execute on this vision can, in time, help achieve the transition to a lower-cost, more accessible, and more connected global financial system giant leap.
Libra is designed to be a digitally native currency that can be used anywhere in the world. Libra brings together the attributes of the world's best currencies: stability, low inflation, broad availability, and fungibility. Technological innovations have given people the tools to connect and communicate. But while people can send each other texts, videos and photos, in many cases they cannot easily transfer value between each other. Economic empowerment is one of Facebook's core values, as evidenced by the 90 million businesses that communicate with customers on the Facebook platform. We've done a lot to democratize free, unrestricted communication for billions of people. We want to help digital currencies and financial services achieve the same goal, but with one key difference: we will relinquish control of the networks and currencies we help create.
Libra is a payment instrument, not an investment. People don't buy it to hold on to, like a stock or bond, and expect it to pay income or increase in value. Instead, Libra is more like cash. For example, people use it to send money to family members in other countries, or to buy things.
Unlike existing stablecoins (digital currencies that minimize volatility by being "pegged" to a single asset), Libra will not have a fixed value in any one real-world currency. Instead, Libra will be fully backed on a one-to-one basis through the Libra Reserve, which will hold safe assets such as cash bank deposits and highly liquid short-term government securities in a basket of currencies. These currencies will include the U.S. dollar, British pound, euro and Japanese yen. This approach will minimize the risk from fluctuations in a single region, providing further stability to people around the world who can rely on Libra for their everyday financial needs.
Monetary Policy
Assets in the Libra Reserve will be held by a geographically distributed network of regulated custodians with investment-grade credit ratings to provide high auditability, transparency, security, and decentralization of assets. These custodians are well versed in how to safely safeguard assets worth billions or even trillions of dollars. Because Libra will be backed by the Libra Reserve, anyone using Libra should have a high level of confidence that they will be able to sell it for their local fiat currency based on the exchange rate, just like exchanging one currency for another when traveling Same.
Monetary Policy
Currencies in the Libra Reserve will be subject to the monetary policies of their respective governments, which will continue to be controlled by those governments. The Libra Association, which manages the Libra Reserve, has no intention of competing with any sovereign currency or entering the realm of monetary policy. It will work with the Federal Reserve and other central banks to ensure that Libra does not compete with sovereign currencies or interfere with monetary policy. Monetary policy remains the domain of the central bank.
Libra Association Partners and Governance
Oversight of the Libra Blockchain and the Libra Reserve will be a significant task and responsibility that no single organization can and should not be solely responsible for. We believe that a collaborative approach is warranted and necessary. Therefore, we are working hard to develop the Libra Association: an independent membership organization.
The first group of organizations (broken down by industry) that will jointly complete the Association Charter and become "Founding Members" upon its completion are as follows:
Payments: Mastercard, Mercado Pago, PayPal, Payu (Naspers' fintech arm), Stripe and Visa
Technology and Markets: Booking Holdings, eBay, Facebook/Calibra, Farfetch, Lyft, Spotify and Uber
Telecommunications: Iliad and Vodafone
Blockchain Services: Anchorage, Bison Trails, Coinbase, and Xapo
Venture capital: Andreessen Horowitz, Breakthrough Initiatives, Ribbit Capital, Thrive Capital and Union Square Ventures
Each member of the Libra Association — a diverse global group of companies, nonprofits, NGOs, multilateral organizations, and academic institutions — will be represented on the Libra Association Council. Through the Council, the Association will be responsible for governing the Libra Blockchain. It will oversee the development of blockchain protocols and networks, and will continue to evaluate new technologies that can enhance blockchain privacy, while also taking into account practicality, scalability, and regulatory implications. It will also serve as the governing body to manage the Libra Reserve. All decisions will be taken in a democratic and transparent manner. To ensure a diverse membership, the Association will work to remove as many financial barriers as possible so that a broad range of nonprofit and multilateral organizations, social impact partners, and universities can join.
The Facebook team has led the creation of the Libra Association and Libra Blockchain and will continue to lead in 2019. However, once the Libra network launches, Facebook and its affiliates will have the same privileges, commitments, and financial obligations as any other founding member of the association. We hope to have about 100 of these members before the Libra Blockchain launches. As one member among many, Facebook will play an equal role in the governance of the association with its peers. Facebook has only one vote and cannot control this completely independent organization.
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3. Impact on business, Libra users and consumers
Regulatory Oversight and Financial Stability
The Libra Association is committed to working with policymakers and regulators to achieve a safe, transparent, and consumer-friendly implementation of Libra. The association recognizes that blockchain is an emerging technology and that policymakers must determine how this technology will fit within the regulatory framework.
Regulatory frameworks for digital assets are beginning to emerge in the United States and internationally. The Libra Association will continue to work with regulators and policymakers to ensure it complies with all applicable legal and regulatory requirements.
Over the past year, federal regulators have repeatedly emphasized their commitment to fostering innovation. This is a general fact, as can be seen from the Treasury report on fintech and innovation. The same applies to the use of new technologies to support compliance with Anti-Money Laundering (AML), Combating the Financing of Terrorism (CFT) and sanctions regulations. The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN), the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), and the National Association of Credit Unions have joined forces to highlight how new technologies can help companies large and small meet their AML/CFT and sanctions compliance obligations important role to play. The Libra Association is committed to taking on this responsibility and is devoting considerable technical expertise to the task.
To be clear, the Libra Association anticipates that it will be licensed, regulated, and subject to oversight. As the association is based in Geneva, it will be supervised by the Swiss Financial Market Supervisory Authority (FINMA). We have held preliminary discussions with FINMA and look forward to engaging with them regarding the appropriate regulatory framework for the Libra Association. The association also intends to register with FinCEN as a money services business.
Anti-Money Laundering, Bank Secrecy Act, and Other Law Enforcement and National Security Issues
The Libra Association is equally committed to supporting the efforts of regulators, central banks, and lawmakers to ensure Libra helps combat money laundering, terrorist financing, and more. A digital network that helps move more cash transactions (where much illicit activity takes place) to a regulatory-friendly digital network will provide an opportunity to improve the effectiveness of financial crime detection and enforcement. The Libra Association will continue to actively and openly engage with all relevant stakeholders on these critical issues. Libra should improve detection and enforcement, not set them back.
The Libra Association will also support policies and procedures related to AML and bank secrecy, combating terrorist financing, and other national security-related laws, and its members will also be required to comply with these laws if they choose to provide financial services on the Libra network .
Protecting consumers and safeguarding people's privacy is one of the Libra Association's top priorities. The association is committed to working with regulators who are exploring the application of relevant laws to distributed ledger technology.
Privacy on the Libra Blockchain will be similar to existing blockchains. Transactions only include the sender's and receiver's public addresses, the transaction amount, and a timestamp, and no other information is revealed. The Association does not individually hold any personal data of people using the blockchain, however collected, nor does it operate any infrastructure. Therefore, the Association cannot and will not monetize data on the blockchain. To protect data and privacy, the Swiss Federal Data Protection and Information Commissioner (FDPIC) will be the Libra Association's privacy regulator.
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4. Structure and Management of Calibra
We don't expect Calibra to make money to begin with, and Calibra customers' account and financial information will not be shared with Facebook and therefore cannot be used for ad targeting. Our first goal is to create utility and promote consumer adoption, enabling people around the world — especially the unbanked and underbanked — to participate in the financial ecosystem.
But we expect the Calibra wallet to be immediately beneficial to Facebook more broadly, as it will allow many of the 90 million small and medium-sized businesses that use Facebook's platform to transact more directly with Facebook's many users, which we hope will Will lead to more use of Facebook by consumers and businesses. The increased usage could lead to greater ad revenue for Facebook.
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5. Impact on Consumers and Calibra Wallet Users
Regulatory Oversight and Financial Stability
Companies offering services on the Libra Blockchain will need to fully comply with the laws and regulations of their jurisdictions, including the Calibra wallet. One of the reasons why Calibra was created as a Facebook subsidiary is that it will provide financial services and will be regulated accordingly. The Calibra Wallet will comply with FinCEN rules regarding its AML/CFT program, as well as rules set by the Office of Foreign Assets Control (OFAC) regarding financial sanctions. State financial regulators will regulate Calibra as a money transfer tool, and the Federal Trade Commission (FTC) and Consumer Financial Protection Bureau (CFPB) will monitor consumer protection and data privacy and security issues. Calibra has applied for a state money transmitter license in the US, and it is also registered with FinCEN as a money services business.
Anti-Money Laundering, Bank Secrecy Act, and Other Law Enforcement and National Security Issues
Protect the privacy and security of personal information
Calibra was designed from the ground up with a commitment to customer privacy. Calibra believes that customers have rights to their data and should have simple, understandable and accessible data management controls. Calibra will not share personal customer data with the Libra Association, nor will Calibra receive other identifiable user data from the Libra Association, however collected. In addition, except in limited circumstances, such as preventing fraudulent or criminal activity and complying with the law, Calibra will not share customers' account information or financial data with Facebook unless people consent to such sharing. Calibra customer account information and financial data will not be used to improve Facebook ad targeting.
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6. Conclusion
