Thread by @nikhileshde

Good morning folks. I'm in Washington D.C., where @SenateBanking/@BankingGOP are about to question @davidmarcus about @facebook's @Libra_ project (coindesk.com/facebook-prepa…). Thread starts here: #LibraInDC

You can follow the hearing yourself at the stream at this link: banking.senate.gov/hearings/exami… #LibraInDC

Banking Cmte Chair Sen. @MikeCrapo is kicking things off, noting that he and Ranking Member @SenSherrodBrown have been asking about Libra since May (focus on credit info/personal data) coindesk.com/us-senators-se… #LibtraInDC

"Despite the uncertainties, Facebook’s stated goals for the payments system are commendable. According to the world bank, 1.7 billion [individuals] remain unbanked," @MikeCrapo says #LibraInDC

Individuals are the rightful owners of their data, @MikeCrapo says (this isn't new for him: he's been very pro-data privacy

https://twitter.com/nikhileshde/status/1147356123982454784

)

"Facebook is dangerous," @SenSherrodBrown says in his opening. "Facebook might not intend to be dangerous, but surely they don’t respect the power of the technologies they’re playing with." #LibraInDC

.@SenSherrodBrown points to @facebook's impact on the journalism industry as one example #LibraInDC

"@facebook tested if it could manipulate our emotions ... manipulate our moods. Turns out it can," @SenSherrodBrown says. #LibraInDC

Brown: "That kind of creative disruption that doesnt' create anything is just disruption." #LibraInDC

.@SenSherrodBrown points to @facebook's actions/impact in Myanmar (I'm not familiar with this one, but something about a genocide?) #LibraInDC

nytimes.com/2018/10/15/tec…

Mark Zuckerberg likened Facebook to a nation, "but no one elected Mr. Zuckerberg," @SenSherrodBrown says #LibraInDC

"Their motto is 'move fast and break things,' well they certainly have. They moved fast and broke our political discourse, they broke journalism ... it takes a lot of arrogance," @SenSherrodBrown says #LibraInDC

"We'd be crazy to give them [access] to bank accounts," @SenSherrodBrown says #LibraInDC

.@davidmarcus is now up: "Today, I want to explain why I'm optimistic about what Libra can offer the world." #LibraInDC

"We will take the time to get this right," @davidmarcus says #LibraInDC

Wouldn't be safer and easier if people could receive money transfers through their smartphones, @davidmarcus asks: That's what Libra is for. #LibraInDC

Wouldn't it*

"I believe that if America doesn't lead innovation in digital currency, others will," @davidmarcus says. #LibraInDC

First q: @MikeCrapo: "Do you agree with me that the US should lead in establishing the rules of the road?" #LibraInDC

.@davidmarcus: We chose Switzerland not to evade oversight but because it is well-known for the WTO … the BIS and even though Libra is established in Switzerland it will still register with FinCEN. #LibraInDC

[note: registering with FinCEN is the easy part]

.@MikeCrapo: Which [US] regulators would have a piece [of oversight]?
.@davidmarcus: This is not for me to say but we are working [to satisfy regulatory bars]. #LibraInDC

.@MikeCrapo: You recently told the banking committee that Facebook Inc collects personal data [from on platform transactions]. Would you describe [the data that's collected/what data @calibra would collect]. #LibraInDC

.@davidmarcus: "One thing [that] is really important … we will have the Calibra wallet compete with [other] wallets ... We will offer many options, including the option for people to pay with credit/debit cards." #LibraInDC

.@SenSherrodBrown now up. Facebook has a history of abusing customer data, he says, pointing to reports that private companies were able to read private messages: "Do you think people should trust you?" #LibraInDC

.@davidmarcus: "You heard it directly from Mark [Zuckerberg], and you-"
@SenSherrodBrown: "I didn't hear it directly from Mark." #LibraInDC

.@davidmarcus says Facebook would only be one of many companies in the Libra project.
.@SenSherrodBrown: "You know better than that, only Facebook has access to 2 billion people." #LibraInDC

.@SenSherrodBrown: Will you and your team pledge to collect 100% of your salary in Libra?
@davidmarcus: Libra isn't designed to compete with the dollar. #LibraInDC
[this is actually repeated a few times]

.@davidmarcus says he would hold all of his assets in Libra, @SenSherrodBrown repeats his question, Marcus eventually says yes, he would accept his entire compensation in Libra #LibraInDC

.@SenSherrodBrown: "Is there anything that elected leaders and economic experts can say that will convince you and Facebook that you should not launch this currency?" #LibraInDC

.@davidmarcus: "We agree with the very legitimate concerns raised by [regulators]. This is why we released our white paper so far ahead of any public launch, we wanted to make sure we took the time to get this right … [cites regulatory oversight]." #LibraInDC

.@SenSherrodBrown: With all due respect, all of us who have seen the collective amnesia of this Congress … if all of us find this to be a bad idea to do this launch, are you still going to do it? #LibraInDC

.@davidmarcus says they won't launch until regulators are satisfied; Brown says this speaks to Facebook's accountability I think? #LibraInDC

In response to a question from @SenToomey, @davidmarcus says Libra would enable "90 million small businesses … to engage in more commerce together." #LibraInDC

.@SenToomey: So you wouldn't even seek the consent of the consumer.
@davidmarcus: Tl;dr it's too early for that right now #LibraInDC

.@SenatorTester now up: asks about how Libra would handle hacking and related issues.
@davidmarcus: I can speak to the Calibra wallet ... [which would] provide consumre protections. #LibraInDC

.@SenatorTester: When I withdraw money from a bank, I know I'll get that money, references FDIC insurance. What faith do we have in Libra?
@davidmarcus: Libra will be backed by a reserve. #LibraInDC

.@SenatorTester asks what assurances we have, @davidmarcus says Libra will be backed 1 for 1, will work with regulators to confirm that the value Libra claims is the value of the reserve #LibraInDC

.@davidmarcus: When everyone opens a @calibra account, you won't need separate accounts, you can use your Facebook account, you have to authenticate, you'll need a government-issued ID [and pass AML/CFT requirements] #LibraInDC

We haven't determined exactly how much we're going to invest, @davidmarcus says in response to a question by @SenJohnKennedy #LibraInDC

I think it'd be very helpful for staff to understand in a briefing ... what parts of the stack might be subject to regulatory oversight, @SenJohnKennedy says #LibraInDC

I believe we have the gold standard for banking in the U.S. ... that will ultimately provide greater consumer protections, @SenJohnKennedy says #LibraInDC

.@SenJohnKennedy: I think it's worth you all doing this, I do have concerns about privacy ... but I believe the U.S., with a consortium that's well-funded, [could meet said gold standard] #LibraInDC

What are the incentives for Facebook to ensure that WhatsApp/Messenger will support third-party wallets, @MarkWarner asks #LibraInDC

.@davidmarcus: We believe it's primordial that users are able to move from wallet to wallet #LibraInDC

.@MarkWarner has now asked multiple times whether @WhatsApp and @messenger will support third-party wallets, and not just @calibra. #LibraInDC
@davidmarcus: [No, but there is interoperability] #LibraInDC

Embedding != preferential treatment, @MarkWarner says #LibraInDC

In response to a question by @SenatorRounds, @davidmarcus says anyone who wants to use Libra will only need to "install a small app on a $40 [Android?] phone with a basic data plan." #LibraInDC

.@SenatorRounds: What does Switzerland offer that the US does not?
@davidmarcus: We did not set up in Switzerland to evade responsibility. #LibraInDC

We'll have AML programs on the @calibra wallet, @davidmarcus says in response to @SenCortezMasto #LibraInDC

.@SenCortezMasto asks if the Libra Assn will be subject to the Bank Secrecy Act, @davidmarcus says no since Assn won't have access to consumers, follow-up is 'who is subject to the BSA', response is that Calibra is working w/ FinCEN/Treasury #LibraInDC

.@SenCortezMasto asks about OFAC/sanctions law, @davidmarcus says Calibra is engaged w/ Treasury about ensuring they follow the travel rule, etc. #LibraInDC

Okay I think it's possible some of the name tags don't correspond to the Senators they're in front of. This is currently @SenJohnKennedy and I'm not entirely clear who was speaking when I tagged him earlier. My apologies there

The actual @SenJohnKennedy is now taking @davidmarcus to task for any potential failures in 2016 during the last presidential election #LibraInDC

Facebook issued a statement saying there were no [attempts to spread disinformation]. That was a lie, wasn't it? @SenJohnKennedy says. @davidmarcus says he isn't sure of the timeline [and later, that it's not his team responsible for that] #LibraInDC

I have tremendous respect for Facebook, but Facebook now wants to control the money supply. What could possibly go wrong, @SenJohnKennedy says.
@davidmarcus: [We don't want to control the money supply] #LibraInDC

.@TinaSmithMN starts off with a question about the assn: "Who's in charge?"
@davidmarcus: There are a council of 100 or more members who will make decisions, and elect a board of 19 members #LibraInDC

.@TinaSmithMN: The U.S. Senate also has 100 members but it's clear who's in charge, Mitch McConnell is in charge ... will [Libra Assn] be a consensus mechanism? #LibraInDC

.@TinaSmithMN: What's the long-term business opportunity here? #LibraInDC
@davidmarcus: More commerce [= more advertising revenue]

.@davidmarcus: If we've earned people's trust with the Calibra wallet and more people use it over time ... we can offer more services [and gain market share of wallets, is @TinaSmithMN's interpretation] #LibraInDC

I don't trust Facebook, @SenMcSallyAZ opens with, points to data breaches, unauthorized data collection, potential privacy changes, bugs, etc: "It's one after another after another. I don't trust you guys." #LibraInDC

"Instead of cleaning up your house, now you're launching into another business model with Libra here and you've got documents talking about your privacy commitment for Libra. [How do we trust this]," @SenMcSallyAZ asks #LibraInDC

The core issue here is trust, @SenMcSallyAZ says.
@davidmarcus: I know we will have to earn people's trust for a very long period of time. #LibraInDC

"For Calibra, you say ... it will be easy to understand controls on what data is being collected. Will users have consent for what data is being collected?" @SenMcSallyAZ asks
@davidmarcus: "Yes."
#LibraInDC

.@SenMcSallyAZ: "Will users have to consent to use Calibra?"
.@davidmarcus: "Yes."
"Then that's really no choice at all." #LIbraInDC

.@davidmarcus says it's because Calibra will be regulatorily compliant #LibraInDC

.@SenatorSinema is getting specific here: If an Arizonian loses Libra to fraud because they were using a wallet developed by a group in, IE, Spain, will they have recourse through American law to recover those funds? #LibraInDC

"Despite granting anonymity, cryptocurrencies aren't the first choice for drug traffickers ... because cryptocurrencies aren't easy to use," @SenatorSinema says #LibraInDC

Libra would be much easier to use, @SenatorSinema says. @davidmarcus says Libra won't be anonymous. #LibraInDC

.@TomCottonAR's up now, says Silicon Valley is "an extremely left-wing place," and he's concerned that this might extend into the payments system because "Democratic members have made it a habit of reaching out to financial institutions and encouraging them not to do business 1/

2/ "... with institutions [like gun manufacturers, etc]. How do you ensure this doesn't happen?"
@davidmarcus: I agree there's a bias [missed the rest] #LibraInDC

.@TomCottonAR: How will you ensure sanctions can be enforced, cites Iran which is reportedly developing its own gold-backed crypto.
@davidmarcus: Sanctions will be enforced, Libra will be in compliance with "our national security" concerns #LibraInDC

Is it fair to say Facebook is still trying to solve cybersecurity, foreign interference, privacy, extremism, fake news, @brianschatz asks in his opening: "Which ones have you fixed?" #LibraInDC

They're all works in progress, @davidmarcus says [paraphrased] #LIbraInDC

.@brianschatz: What do you say if someone asks why not fix [existing issues] before moving onto this enormously important thing? #LibraInDC

.@davidmarcus: It will help [unbanked individuals]. #LibraInDC

.@brianschatz: You're making an argument for cryptocurrencies generally ... the question is not, should the US lead in this ... the question is [why Facebook]? #LibraInDC

.@brianschatz asks if the Libra Association has bylaws. @davidmarcus says the charter is still being ratified, but will be made public once it is. #LibraInDC

.@brianschatz: What I'm hearing, and they're terrified to talk about this publicly, but members of the consortium have questions too ... and they have great reservations about moving forward but they don't want to be left out because of @facebook's market power. #LibraInDC

How do you deal with Facebook's size and power and the fact that people already think it's already too powerful? @brianschatz asks #LibraInDC

Why in the world should Facebook, of all other companies, do this? @brianschatz asks.
@davidmarcus: Because we have the ability ... we have the resources and I believe we should. #LibraInDC

.@DougJones up now: How do we get these partners to verify these third-party products? #LibraInDC

.@davidmarcus says again that Libra won't launch till regulators are happy #LibraInDC

.@Libra_, unlike other digital currencies out there, will not be volatile to the dollar, @davidmarcus says. @calibra will comply with tax law #LibraInDC

We'd be happy to work with the IRS to make it easier for consumers ... in order to avoid the burden, @davidmarcus says #LibraInDC

Libra "is definitely not moving fast," @davidmarcus says in response to @SenatorMenendez #LibraInDC

Btw @SenatorMenendez has an exhibit. The top says "Move Fast and Break Things" (w/ the quotes) #LibraInDC

.@SenatorMenendez asks about two Iranian nationals who were put onto OFAC's sanctions list last year for exchanging bitcoin for transactions related to the SamSam ransomware coindesk.com/us-regulators-… #LibraInDC

"If we don't lead, someone will," @davidmarcus says, before pivoting to how Calibra might abide by sanctions law #LibraInDC

.@SenatorMenendez: If we wanted to enforce sanctions but other global regulators did not, how would the Libra Association determine which to follow?

.@davidmarcus The way to properly police and control the network is one, through the on and off ramps, and two through the- 1/

2/ @SenatorMenendez: I'm going to assume LIbra won't launch until these questions are resolved because otherwise, Libra could be the wild west of cryptocurrencies. #LibraInDC

.@ChrisVanHollen taking a minute to go after Trump's tweets on four Congresswomen of color the other day, and its timing a few days after the social media summit Trump held #LibraInDC

.@ChrisVanHollen draws a firm distinction between $BTC and Libra: "The uncertainty, the value [of bitcoin] fluctuates ... in my opinion it's not going into widespread use whereas the goal here is [global access]." #LibraInDC

Facebook is not really a company anymore, it's a country. I don't see anything in the documents [that would prevent private views from impacting ability to use Libra], @SenJohnKennedy says (we're back to him, for the second, not third time, again sorry about that) #LibraInDC

Using abortion rights as an example: There's nothing in the Libra docs that says 'if you believe in abortion rights you can't use Libra,' or vice versa, @SenJohnKennedy says #LibraInDC

.@SenJohnKennedy has a few questions about alleged practices wrt news that Facebook participated in, @davidmarcus says he's not aware and he wasn't part of that team #LibraInDC

Facebook really is a technology platform, @davidmarcus says
"I'm familiar with Facebook," @SenJohnKennedy says. #LibraInDC

.@davidmarcus: "It's not about the money-"
@SenJohnKennedy: "It's /NOT/ about the money? ... don't you have shareholders?" #LibraInDC

.@SenSherrodBrown: I don't normally respond to uber-partisan remarks from colleagues but I'd like [staff?] to let @TomCottonAR know that every letter to Facebook has been jointly signed by @MikeCrapo and myself #LibraInDC

.@SenSherrodBrown is bringing it back to trust: Why should [we] trust Facebook? #LibraInDC

.@davidmarcus: We'll be one of 100 members.
@SenSherrodBrown: You trust us to believe that? [might be a little paraphrased] #LibraInDC

"Chairman, I wish that we could trust Facebook. It's pretty clear that almost no one in this committee does," @SenSherrodBrown concludes. #LibraInDC

.@MikeCrapo, bringing this back to privacy, points out the US doesn't have the same laws as say, the EU (GDPR). #LibraInDC

.@MikeCrapo: As I understand it, using the blockchain technology results in a limited amount of data being collected ... I've been told that blockchain ... allows for an enhancement in privacy protection. Do you believe that? #LibraInDC

[Meta] Brown and Crapo are the only two Senators still in the room, it looks like

And we are done with the Senate Banking Committee hearing on Facebook's Libra. House Financial Services Hearing is tomorrow, 10am ET #LibraInDC