Thread by @nikhileshde

Good morning Washington. I'm back for Day 2 of the #Libra hearings: the @FSCDems/@FinancialCmte edition. @davidmarcus will be on deck for the second round in 15 minutes. Here's a preview of what we might expect from our other witnesses: coindesk.com/facebooks-libr… #LibraInDC

@FSCDems @FinancialCmte @davidmarcus Watch live and catch up here: #LibraInDC

https://twitter.com/coindesk/status/1151490349254230017

"Today we’re here for a hearing on Facebook’s proposed digital currency, libra, and its wallet, calibra, and its impact on the financial system," says @MaxineWaters, kicking off today's #LibraInDC hearing

Facebook has "demonstrated a pattern of failing to keep user data protected on a scale [equal] to Equifax," @MaxineWaters says. Also likened FB to Wells Fargo #LibraInDC

.@MaxineWaters references a letter she and some other FSC Dems signed asking Facebook to put a moratorium on development earlier this month #LibraInDC

The Ban Big Tech From Banking Bill [name might be wrong] will be discussed today, @MaxineWaters says #LibraInDC

.@PatrickMcHenry is now up: We should make sure the US is not where innovation goes to die #LibraInDC

.@PatrickMcHenry is anti killing innovation but notes that it is Facebook that's involved. #LibraInDC

"We should not deter this innovation. Governments cannot stop this innovation," @PatrickMcHenry says of bitcoin and the Satoshi white paper #LibraInDC

.@PatrickMcHenry was apparently on CNBC this morning to talk about bitcoin

https://twitter.com/SquawkCNBC/status/1151467890782216194

#LibraInDC

This didn't thread but

https://twitter.com/nikhileshde/status/1151497697393893376

.@davidmarcus is now up. Here's his opening statement: financialservices.house.gov/uploadedfiles/… #LibraInDC

"We will take the time to get this right," @davidmarcus says for like the 50th time in two days #LibraInDC

.@davidmarcus is basically reiterating his opening statement from yesterday: fast remittances, helping unbanked individuals, will wait to launch till all regulators are satisfied #LibraInDC

.@MaxineWaters (rather, a staffer, I assume) tweeted this just now #LibraInDC

https://twitter.com/RepMaxineWaters/status/1151497441025437696

Facebook won't compete with sovereign currencies, @davidmarcus says: "These are properly the province of central banks." #LibraInDC

It looks like @Libra_ deleted this tweet but yesterday, the twitter account quoted a line from a @WSJ piece referring to it as "a de facto central bank." #LibraInDC

https://twitter.com/Libra_/status/1151173748432822272

A possible de facto central bank, rather.

First question from @MaxineWaters is "why should we trust you?"
@davidmarcus says Facebook will have to work at that. #LibraInDC

"Will you stop dancing around this question and commit here in this committee ... to a moratorium until Congress enacts an appropriate legal framework to ensure that Libra and Calibra do what you claim it will do?" @MaxineWaters asks #LibraInDC

"We are all in favor of innovation ... but we need to be on top and understand something as massive as this project," @MaxineWaters says #LibraInDC

"I agree with you that this needs to be analyzed and understood before it can be launched ... and this is my commitment to you. We will take the time to get this right," @davidmarcus says (he did not say they'd stop) #LibrainDC

.@PatrickMcHenry asks if Libra is a security, a commodity, or an ETF (over three qs). @davidmarcus says it's not a security, it might be a commodity but Facebook prefers to see it as a payment tool, and it's not an ETF #LibraInDC

"If it's none of the above, how do you comply with regulations," @PatrickMcHenry asks #LibraInDC

.@davidmarcus says @calibra will comply with existing US regulations, but @PatrickMcHenry says he's asking about Libra, to which Marcus starts discussing the Libra Association #LibraInDC

"So you're saying it's the nature of the wallet that [fulfills KYC/AML law], it's not the nature of the cryptocurrency," @PatrickMcHenry asks. @davidmarcus says the Libra Assn will also be in charge of this #LibraInDC

If you're trying to compete with AliPay and WeChat, why are you doing this in Switzerland, and why are you using a basket of currencies, @PatrickMcHenry asks #LibraInDC

Libra is not trying to evade US regulation by setting up in Geneva, @davidmarcus says #LibraInDC

.@RepMaloney now up: Her first question is will Facebook commit to a moratorium on development.
@davidmarcus: We won't launch until-
Maloney: I take that as a no. #LibraInDC

.@RepMaloney asks if @davidmarcus et al will commit to a small pilot program of 1m users overseen by the Fed and the SEC before they go for a full launch #LibraInDC

.@davidmarcus basically went over his talking points about releasing the white paper early etc #LibraInDC

@RepMaloney asks @davidmarcus again if he will commit to a small pilot program. Marcus says he'll commit to working with regulators. #LibraInDC

"I don't think you should launch a new currency at all," is something @RepMaloney said. #LibraInDC

.@RepMaloney asks if a third party wallet can be integrated into WhatsApp and Messenger, which @davidmarcus does not really answer. #LibraInDC

.@RepAnnWagner asks what Facebook will do to ensure it's compliant with sanctions, @davidmarcus says someone will build a similar network #LibraInDC

"You're not suggesting that just because someone else might launch a sanctions-evading [network?] it's okay for Facebook to do it?" asks @RepAnnWagner (@davidmarcus: No, I'm not suggesting that) #LibraInDC

.@NydiaVelazquez asks if @davidmarcus will commit to not launching until all concerns are addressed (I think she meant to ask if FB will commit to halting development until said concerns are looked into) #LibraInDC

.@davidmarcus will definitely commit to not launching until concerns are addressed and is probably relieved he wasn't asked about halting development #LibraInDC

https://twitter.com/MarcHochstein/status/1151505801779011584

.@MaxineWaters now clarifying @NydiaVelazquez's question about what @davidmarcus is committing to. Marcus did not commit to a moratorium, she noted after. #LibraInDC

.@RepFrenchHill asking about fees for remittances #LibraInDC

Libra "will be a very high-quality digital currency," for a number of countries, @davidmarcus says #LibraInDC

.@RepFrenchHill asks about countries with currency controls. @davidmarcus says the answer is a "country-by-country" approach (Facebook's already said Libra might not launch in India, as one example coindesk.com/facebook-says-…) #LibraInDC

.@RepGregoryMeeks now up: "I can say with confidence that the Lehman Brothers, subprime mortgages ... did not set out to bring the financial system to its knees." #LibraInDC

Let's assume that Facebook gets even 10 percent of its current userbase onto Libra. Do you understand that would make you a systemically risky institution? @RepGregoryMeeks asks #LibraInDC

10 percent of (2.3 billion?) people would be comparable to other non-bank institutions, @davidmarcus says #LibraInDC

Facebook, or rather, Calibra I guess? Will hold money much the same way Venmo will, @davidmarcus says #LibraInDC

Facebook is working with all Financial Stability Oversight Council agencies, @davidmarcus says #LibraInDC

.@MaxineWaters asks @davidmarcus to clarify if he's opposed to FSOC and being labeled a SIFI. Marcus says he's working with FSOC. #LibraInDC

.@RepBlaine asks what kind of financial or banking services will libra grow into.
@davidmarcus says Calibra will partner with banks if it gets to that point but it's early #LibraInDC

.@RepBlaine now trying to clarify if there's fees for converting Libra to USD and how that'd work. @davidmarcus says there'll be "small fees" depending on exchanges but for IRS purposes, there'll be tools for people to report their taxes #LibraInDC

.@repdavidscott says they're concerned about the safety of the [existing] financial system. "What do you see as the responsibilities of Libra to combat money laundering, to protect our financial system?" #LibraInDC

It'll be up to the Libra Assn but there'll be "strong AML" procedures, @davidmarcus says #LibraInDC

https://twitter.com/MarcHochstein/status/1151511603877163009

.@RepHuizenga: "Why do you feel the need to have a reserve? It seems to me you're using a fiat currency to back a fiat currency." #LibraInDC

.@davidmarcus says they want to ensure Libra isn't volatile #LibraInDC

.@RepHuizenga: Wouldn't the price change with trust in the currency? [paraphrased]
@davidmarcus: Yes and no, in other words-
Huizenga [while laughing]: You'd fit perfectly into Washington #LibraInDC

What is this, is this fish or fowl, and it seems to me it's more of a platypus, @RepHuizenga says. "I'm curious if you can maintain the core [aspects] of a cryptocurrency if you're under all this regulation?" #LibraInDC

.@davidmarcus says he thinks they can. @RepHuizenga asks if Marcus would like to see all other cryptocurrencies fall under the same level of regulation. Marcus says Libra is different from other cryptocurrencies #LibraInDC

.@RepHuizenga asks to clarify if @davidmarcus has been in touch with FINMA, Marcus says he has but there's another agency (privacy-focused?) that he has not been in touch with #LibraInDC

.@RepPerlmutter: Say I use $5 to buy one Libra. What happens to the $5?
@davidmarcus: It goes to the reserve #LibraInDC

That's the resistance you're feeling, because we think you're a bank but you're not quite a bank ... I want to support your innovation, I want to support the efficiency you think you're bringing but [not there yet], @RepPerlmutter says #LibraInDC

"Congressman, we're completely in alignment on that," @davidmarcus says. #LibraInDC

.@RepSeanDuffy: I think this is brilliant, @LibraInDC

Who can use a $20 bill? Everyone, @RepSeanDuffy says. "Who can use Libra? Can Milo Yiannopolous or Louis Farrakhan? I ask because they're both banned from Facebook." #LibraInDC

.@davidmarcus says hate speech on a communications platform can be barred, doesn't know if MY or LF can use Libra just yet #LibraInDC

.@RepSeanDuffy also asked about gun purchases, etc. @davidmarcus says they're still working those details out #LibraInDC

.@RepSeanDuffy: I think the right answer should be 'everyone who's abiding by the law can use this' #LibraInDC

"The right answer is anyone can use this but you didn't give me that and that gives me great pause," @RepSeanDuffy says. Adds he's got concerns on data privacy, etc #LibraInDC

.@jahimes asking about foreign currency risk, @davidmarcus says there will be fluctuation #LibraInDC

Traditionally, if you're going to assume a risk, that risk will be disclosed to you, and that's usually through disclosures, @jahimes says #LibraInDC

.@jahimes says that as a former banker, Libra looks like an ETF to him (Gary Gensler will make the same argument in his own remarks when he goes up later) #LibraInDC

"We believe no one will buy Libra as an investment," @davidmarcus says, also pushing back against the Howey Test implications for Libra #LibraInDC

"It's been 60 days since you announced, right?" @RepSteveStivers asks (it was announced a month ago but it really has felt like three years) #LibraInDC

.@RepSteveStivers asks if there'll be a limit on how much can be transferred in Libra as a potential way of preventing illicit activities. @davidmarcus says he thinks there might be in accordance with regulation #LibraInDC

There will probably be a limit across the network for transaction amount, @davidmarcus says #LibraInDC

.@RepSteveStivers asks if companies like @ChickfilA could be barred from using Libra due to social views. @davidmarcus says that's up to the Libra Assn #LibraInDC

BRAD SHERMAN

"Madam Chair, we need Mark Zuckerberg here," @BradSherman says, before saying Libra might do more harm to the US than 9/11 #LibraInDC

"No one's going to call this Libra, they're going to call it ZuckBucks," @BradSherman says #LibraInDC

This is a godsend to drug dealers and sanctions evaders and [other criminals?], @BradSherman says #LibraInDC

America's power comes more from the dollar than even the U.S. military, @BradSherman says, citing sanctions, anti-criminal activities, etc #LibraInDC

.@BradSherman doesn't think that Libra will fix cross-border remittances or banking unbanked individuals (citing India, which FB again, apparently won't launch in) #LibraInDC

If Libra's used in a terrorist attack, 100 lawyers charging $2k each won't be enough to protect Zuckerberg from the wrath of the American people, @BradSherman says. He yields without asking any questions #LibraInDC

"Facebook is often [accused] of invading the privacy of its users. Why doesn't Facebook know how many of its users are unbanked or underbanked?" RepAndyBarr asks #LibraInDC

How do we know that Libra will promote greater financial inclusion in the U.S.? @RepAndyBarr asks. @davidmarcus repeats yesterday's claim that a "$40 smartphone with a basic data plan" will make it easy for unbanked individuals to access Libra's services #LibraInDC

.@RepBillFoster wants to know if there's anything to prevent Libra from being used in ransomware (remember when WannaCry tried to take over the world for bitcoin ransoms?) #LibraInDC

"Do you have any technical way of stopping" users who self-custody Libra from using it in ransomware activities, @RepBillFoster basically asks #LibraInDC

.@davidmarcus says the on and off ramps will all be regulated, but this question by @biyanmienert seems a bit relevant

https://twitter.com/biyanmienert/status/1151471425636769794

#LibraInDC

How are you going to deal with the governance of [having "bulletproof cybersecurity"]? @RepBillFoster asks #LibraInDC

A compiler won't execute code unless it's been formally verified, and the Libra Association will have guidelines to outline what code can or cannot be published, @davidmarcus says #LibraInDC

We're taking a 10-minute break #LibraInDC

And we're back. @RepTipton is now up: When you're looking at your association, are you doing any active recruiting w/ financial institutions? #LibraInDC

Anyone can join, provided they meet the criteria FB developed and pay the $10m fee, @davidmarcus says #LibraInDC

Do you have any plans to do outreach, to build out [high speed internet access] networks? @RepTipton asks.
@davidmarcus: No [he also repeats his $40 phone talking point] #LibraInDC

Do you believe Calibra should be subject to the same banking regulations that our existing banks are? @RepTipton asks. @davidmarcus says Calibra will focus on payments, won't provide banking services right now @LibraInDC

.@RepBeatty: Are you competing with banking or not?
@davidmarcus: No
Beatty: Will you consider yourself a bank?
Marcus: No #LibraInDC

https://twitter.com/nlw/status/1151528181142343680

.@RepBeatty is asking if Libra users can get their fiat back, @davidmarcus says Calibra will enable this #LibraInDC

.@RepRWilliams seems to be coming out against the hearing on Libra, saying there are other issues that the House needs to address. He's saying private companies should be allowed to do their thing #LibraInDC

.@RepRWilliams: You're a capitalist?
@davidmarcus: I believe in this country we all are.
#LibraInDC

.@RepRWilliams acknowledges that Facebook said it won't launch Libra in India. @davidmarcus says the Libra network will be interoperable #LibraInDC

.@GuamCongressman now grilling @davidmarcus on usage expectations. Marcus says he doesn't know what it might look like, San Nicolas says he "disbelieves that" #LibraInDC

"You're going to triple your growth in one year and you don't even know what the average size of a libra wallet is?" @GuamCongressman asks #LibraInDC

.@GuamCongressman is asking how Facebook's convincing Fortune 500 companies to sign up when they can't say what kind of usage there'll be on Libra #LibrainDc

.@RepLoudermilk (who apparently has a background in the IT and data industry): How can you assure us and the American people that this isn't going to be another illicit financing tool? #LibraInDC

A follow up question was about FSOC designating Libra a SIFI, which @davidmarcus doesn't think is for him to say #LibraInDC

.@AyannaPressley: "It is long past time we stop compromising consumers' privacy ... and we can no longer simply trust but not verify." First q asks @davidmarcus if he's familiar with the Libra press release #LibraInDC

.@AyannaPressley asks if any of Libra's current 27 consortium members are based in the 7 countries w/ the greatest number of unbanked individuals #LibraInDC

(the answer's no) #LibraInDC

.@AyannaPressley: Does Libra require a smartphone?
@davidmarcus: Yes, and now you can buy one for-
Pressley: Reclaiming my time. #LibraInDC

.@AyannaPressley says "the Federal Reserve has failed to offer Americans an equitable, reliable, safe and secure system" to move their funds I think? #LibraInDC

.@WarrenDavidson, who held an industry forum on potential crypto/ICO legislation last fall, now up: says companies are leaving US due to unclear regulatory structures #LibraInDC

.@WarrenDavidson asks if Libra would fall into a security classification. @davidmarcus says he thinks it's a payments system, not a security. #LibraInDC

.@WarrenDavidson points to a recent SEC statement on how you don't need an expectation of profit to have a security classification. I'm guessing the SEC/FINRA joint statement coindesk.com/sec-finra-expl… #LibraInDC

.@WarrenDavidson: Will you launch this outside the US if you don't get a go-ahead from within it? [paraphrased]
@davidmarcus: We won't launch until regulatory concerns are addressed [does this answer the question? I'm not sure] #LibraInDC

.@JoshGottheimer asks if FB set up in Switzerland, not to avoid guardrails, but to avoid a lack of regulatory clarity.
@davidmarcus: They wanted Libra Assn to be an international entity #LibraInDC

.@RepTedBudd shouts out @coincenter, @BlockchainAssn and @DigitalChamber as resources companies can use #LibraInDC

.@RepTedBudd asks @davidmarcus if he can commit to ensuring Libra will remain politically neutral, and if he can commit to producing guidelines outlining how this will happen #LibraInDC

.@davidmarcus says there's two issues: One, the Libra Assn -- they'll sort out Libra, and then two, Calibra, which will provide such guidelines at some point #LibraInDC

.@RepTedBudd references a quote from I think @SenMcSallyAZ? about companies like Google and Facebook needing to "embrace the First Amendment, not only for their own employees." #LibraInDC

"How can we be assured that this offramp to 'permissionless' actually occurs?" @RepTedBudd asks. @davidmarcus says this is a WIP #LibraInDC

.@AOC now up: Why should [all of Facebook's] activities be consolidated under one corporation? #LibraInDC

True

https://twitter.com/ElleBeyoud/status/1151538081918529539

.@AOC asks about Libra being a stablecoin. @davidmarcus repeats his "one-for-one" point, though I'm still not 100% clear on what the second "one" is -- a unit of the basket of currencies backing Libra? #LibraInDC

.@AOC: Were [the Libra Assn members] democratically elected?
@davidmarcus: No.
AOC: So who picked the members? #LibraInDC

Do you believe currencies are a public good? @AOC asks.
@davidmarcus says they'll work with regulators to address concerns, adds "it's not for me to decide" after AOC pushes him. #LibraInDC

https://twitter.com/peteschroeder/status/1151540437376741383

After a quick line of "Switzerland?" with @RepDavidKustoff, @RepAdams is now following up on the Libra Association line of questioning that @AOC started #LibraInDC

.@RepAdams: "Can individuals join" the Libra Assn?
@davidmarcus: No, there is a list of criteria that potential members must meet #LibraInDC

.@RepAdams also follows up on @GuamCongressman's line of questioning about why F500 companies would join something if they don't know what they're getting into #LibraInDC

.@RepAdams: You expect us to believe that you'll collect financial data and not share it [with Facebook main] because you promise?
@davidmarcus: Yes. #LibraInDC

.@RepAdams what's changed since Cambridge Analytica?
@davidmarcus: We've got tighter controls, etc #LibraInDC

.@RepAdams: How much has been invested in this so far?
@davidmarcus: The investment hasn't happened yet, will happen in future #LibraInDC

.@RepAGonzalez: Who picked the existing Libra Assn members?

.@RepAGonzalez also points out that Facebook's developed all code so far, etc: "We're all politicians. I think if we all could hand-select our voters we'd be comfortable we could influence [something]." #LibraInDC

.@RepAGonzalez: Could a Chinese state-owned enterprise get in?
@davidmarcus: That's not up to me. #LibraInDC

"I'd be shocked if Facebook didn't at some point share data with Calibra," @RepAGonzalez says, with absolute silence in response. #LibraInDC

.@RepDean is grilling @davidmarcus on what Facebook has learned from its most recent data privacy scandals: I think before you move on to Libra, you should clean up [your existing messes?] #LibraInDC

I don't think your simple example of a young woman who wants to send $200 to her mother in a war-torn country [holds up]. Where is your profit, @RepDean asks #LibraInDC

.@RepTrey is trying to have @davidmarcus outline the differences between Libra and a cryptocurrency that's more strictly peer-to-peer, decentralized, etc #LibraInDC

.@RepChuyGarcia following up on @brianschatz's line of questioning from yesterday about Libra Assn members having concerns about Libra #LibraInDC

.@davidmarcus says he's aware that Facebook has a leadership here #LibraInDC

.@RepRiggleman now up, asking about the full assn's role in the implementation of Libra, wants to know why Rust was chosen for the implementation: "Do you think it's mature enough and able to handle the security issues?" #LibraInDC

https://twitter.com/MikeIsaac/status/1151548290015514624

#LibraInDC

.@RepSylviaGarcia is questioning the $40 smartphone talking point, asking if Facebook will help improve infrastructure to help make accessing and using cheap phones/data networks easier (@davidmarcus: No, not really) #LibraInDC

.@RepSylviaGarcia trying to get a dollar figure on how much Facebook has invested into Libra so far (with little success), wants to know how Facebook's recouping that investment #LibraInDC

.@RepSylviaGarcia ran out of time but @RepJohnRose is following straight up, asking @davidmarcus to explain how FB will benefit #LibraInDC

.@davidmarcus: Will see benefits from greater network usage, more ad revenue?, etc #LibraInDC

.@RepJohnRose now taking the opportunity to discuss the need for greater regulatory clarity and the Token Taxonomy Act, which he's a cosponsor of. #LibraInDC

"Mr. Marcus, was it a coincidence that Libra decided to headquarter in Switzerland, which has clear regulatory clarity?" @RepJohnRose asks #LibraInDC

Libra looks like a currency ETF and should therefore maybe be regulated by the @SEC_News, but clarity is needed, @RepJohnRose says #LibraInDC

.@RashidaTlaib (who's been chairing the meeting for the last hour or so) is now up, entered a few letters and opeds (including by FB co-founder Chris Hughes) #LibraInDC

.@RashidaTlaib: Mr Marcus, who picked the first 28 members of the Libra Association?

.@davidmarcus: Those came out of outreach, and those are the first out of 100, and Facebook will not be able to pick and choose. #LibraInDC

A lot of the members of companies on the Libra Assn have tight connections to each other, @RashidaTlaib says #LibraInDC

.@RashidaTlaib is hammering on whether @davidmarcus is concerned about Facebook "undue influence" on Libra, how exactly Libra Assn of 100 members with $10m min buy-in will reflect diverse perspectives, etc #LibraInDC

From this morning: #LibraInDC

https://twitter.com/RepRashida/status/1151507160188227584

.@RepBryanSteil asks how Libra, Calibra and the Libra Assn should be regulated #LibraInDC

Is there anything in securities law that gives you pause, that you don't want to fall under the Howey Test? @RepBryanSteil asks #LibraInDC

.@RepStephenLynch is also asking about personal data concerns #LibraInDC

.@davidmarcus: My commitment to you is we're going to take our time-
@RepStephenLynch: That's meaningless. First off, you've never done that, and if I tell you I'm going to take my time, what does that mean? #LibraInDC

.@RepStephenLynch: Would you commit to accepting fiduciary duty? #LibraInDC (ran out of time)

.@tomemmer now up, talking about how "some people want to unnecessarily ban [bitcoin] or restrict it," referring to "some people from California" #LibraInDC

"I don't want to be partisan," @tomemmer says right before referring to his grandfather's Democratic Party #LibraInDC

.@tomemmer: "Unfortunately, [@davidmarcus], you have chosen to approach this undertaking with the same level of ignorance as some members of Congress ... I hope someone whose opinion you value conveys to you how wrong you have been operating." #LibraInDC

.@tomemmer, who doesn't want to be partisan, is now talking about how the majority party is ignoring innovation (referencing the ban big tech from money bill) and also Facebook is coming at this all wrong #LibraInDC

.@RepAlGreen is concerned about the dollar. #LibraInDC

.@davidmarcus says the reserve will "mainly" be backed by the dollar -- later adds that it'll be 50% dollars, with euros, pounds and the yen. #LibraInDC

.@RepLanceGooden had some questions about data privacy, etc, and whether Mark Z would show up to testify #LibraInDC

.@katieporteroc starts off asking about wildcat banking: How is libra different from a note issued by a wildcat, many of which were ultimately worthless? Marcus says it's the reserve. #LibraInDC

.@katieporteroc asks what's to stop Libra Assn from swapping out the reserve from 50% USD to, ie, 100% Venezuelan bolivares. Marcus says they'll be regulated. Porter asks by who. Marcus says the G7 oversight group. #LibraInDC

.@katieporteroc asks if banking statutes(?) apply. @davidmarcus says they're not a bank. Porter asks if they're going to be taking and holding US dollars from consumers and still claim to not be a bank #LibraInDC

Five minute recess, second panel is being set up now #LibraInDC

@threadreaderapp unroll