Yesterday, Oct. 23, Cointelegraph reported from the United States House of Representatives as the Financial Services Committee questioned Facebook CEO Mark Zuckerberg for over six hours. While focused on the Libra Association and its planned Libra token, the hearing expanded to touch on a wide range of concerns and controversies surrounding Facebook.
The hearing was often contentious, with several members of Congress using their allotted five minutes of questioning to rail against Zuckerberg rather than ask him a single question. As Congressman Warren Davidson wryly commented to Cointelegraph, “I don’t think day-to-day at his company he gets treated that way very often. There are people who have frankly been pretty rude.”
Facebook’s commitment to hold Libra’s launch until U.S. regulatory approval
In many respects, the hearing saw little change from Head of Calibra David Marcus’s appearances before the House and the Senate in July. If anything, the hearing was distinct because the committee members felt freer to take Zuckerberg to task for Facebook’s historic transgressions than they had with Marcus, a relative newcomer to the organization.
One major announcement came from Zuckerberg himself. The Facebook CEO’s planned opening remarks were published on Oct. 22, in which he committed to Facebook not launching Libra anywhere in the world without approval from all appropriate U.S. regulators. As Cointelegraph reported from the hearing, Representative Bill Huizenga (R-MI) sought to clarify the relationship between Facebook and the Libra Association. During his line of questioning, the congressman asked what Facebook’s response would be should the Libra Association insist on launching without American regulatory approval. Zuckerberg answered, “Then I believe that we would be forced to leave the association.”
The answer was striking, given Facebook’s central role in forming the Libra Association. Indeed, many in the committee directed their questions without bothering to draw any distinction between the organizations. As Huizenga told Cointelegraph, “That’s what I was trying to figure out: Is Libra Facebook?” It’s a distinction that both David Marcus and Mark Zuckerberg have taken pains to draw, with mixed results. As much as Zuckerberg affirmed that Facebook would only be a single vote within the association, it was him sitting before the House Committee in a sea of cameras answering for Libra as a whole.
But would Facebook actually leave? As Huizenga saw it, Zuckerberg “seemed to hesitate a little bit when he was answering that. It seemed like there was a qualifier in there, that ‘I guess we would have to.’”
Representative Warren Davidson (R-OH) had a different perspective, instead seeing Facebook’s need to leave the Libra Association as pragmatic. In reference to the $10 million investment required for membership into the association, Davidson told Cointelegraph, “Frankly, $10 million to Facebook is a rounding error.” He elaborated:
“Think about it as a fiduciary responsibility to the value of Facebook. If Facebook is domiciled in the U.S. and they are going to be involved in something that is going to be illicit in the U.S., it would be hard to be a part of that. So I don’t think it is as big of a commitment as a lot of people think. It’s just like, ‘Well, I’ve got to take care of Facebook first and foremost.’”
Davidson did not address whether the association would actually see fit to move forward without Facebook as its driving force. When Cointelegraph asked Committee Chairwoman Maxine Waters (D-CA) about her feelings on the prospect of Libra launching without Facebook, she answered, “I don’t support Libra at all at this point. It is not as if I support it if it does this or if it does that. At this point, I am not a supporter of Libra.”
The question remains: How firmly could U.S. law contain such a launch outside of its borders? But for all parties involved, it seems that a delay in Libra is preferable to losing Facebook and the U.S. market in perpetuity.
The outlook for Libra: Can it satisfy all regulatory concerns?
A delay is not a full stop. While it may not be worth it to the Libra Association to wait instead of move forward without Facebook, it’s uncertain that regulators will ever be satisfied with the project.
As Congressman Huizenga put it in an interview with Cointelegraph, “Collectively we can’t tie our shoes right now in Washington, much less figure out a complicated, involved act like this.” He continued, “I’m afraid that if [Mark Zuckerberg] is waiting for all of the regulators to greenlight this, I’m not sure this thing ever gets launched.”
It’s possible that the bar that regulators are setting for Facebook — which Zuckerberg repeatedly committed to — will be impossible to reach. The meaning of the term “all appropriate regulators” seems inherently slippery. It is also clear that many in Congress harbor deep suspicion towards everything that Facebook touches, treating yesterday as a chance to publicly flog the elusive Zuckerberg. Continue reading…