Transcripts For CSPAN3 Facebooks David Marcus Testifies Befo

Transcripts For CSPAN3 Facebooks David Marcus Testifies Before House Financial Services Hearing... 20240714

Facebook has announced plans for a new Digital Currency, called libra. David marcus testified for the House Financial Services committee. The committee will come to order. The chair is often recess of the committee at any time. This is entitled based proposed crypto currency an impact on consumers, investors, and the American Financial system. I will now give an Opening Statement for five minutes. Today we are here for a hearing on its books proposed Digital Currency, libra, and digital wallet, and the impact on consumers, investors, and the Financial System. David marcus, following his testimony, a panel of experts will share their views on this book plans, is there are serious concerns about the creation of a Digital Currency and digital wallet to expand its reach, like mastercard, paypal, visa, uber reggie lyft rideshare, and specify. Is trying to create a new global fund to rival the us dollar this venture is slated to be based in switzerland, which has a history of creating a haven for criminals and shady corporations. This plan includes serious privacy training, and monitoring of policy concerns. With 2 billion users, will have immediate access to these products, but also from consumers, festers, and the global economy. In addition, facebook has proposed government guaranteed securities and holding them in a libra reserve, to be governed by facebook and its partners, and ownership of assets on a massive scale without proper oversight threatens to concentrate government influence in the hands of a few elites. If these plans come to fruition, the company and its partners will hold immense economic power that could destabilize currency in the government, these proposed interests are all the more troubling because facebook has already harmed vast numbers of people on a scale similar to wells fargo, and devastating impact failing to keep your data private, on a scale that mirrors equifax credit facebook remains under a 2011 Consent Order from the federal trade commission, for deceiving consumers and failing to keep consumer data. In the weights of the Cambridge Analytica scandal in which facebook provided 50 million user private data to a political consultant firm, the company will reportedly pay a record 5 billion for data privacy failures, and in addition, facebook has allegedly stored user passwords dated back to 2012, and paid unsuspecting teenagers to download spyware, experienced a hack of 50 million accounts, and experienced a software bug that granted thirdparty access 6. 8 million user folders. Facebook has also been sued by civil Rights Groups for violations of the fair housing act, which amounts to modern day red lighting. Space facebook has also allowed the purchasing of target ads in a campaign to influence the 2016 election. There are also concerns about the lack of diversity in facebooks upper ranks, and fears that if these plans go forward, women and minority owned businesses may be excluded from fully participating. My colleagues and myself wrote to facebook, calling it to cease implementation of these plans until regulators and congress can examine the issues associated with the Large Technology company developing a Digital Currency, to take action, independent Community Bankers of america and other support groups support this step. Facebooks plans also raise larger concerns about technical expansion into Financial Services as it appears to inappropriately mix commerce and banking activities. Today we will discuss a draft bill that would prevent large platform utilities like facebook from becoming financial tuitions, and block them from creating their own currencies. That is only the first step in our oversight and legislative process. I look forward to hearing from our witnesses to the chair now recognizes the Ranking Member of the committee, to speak for five to go the headlines and sift through speculation and hearsay. Here is just one of my favorite headlines, which asks is facebook forming a crypto mafia as Libra Foundation members boost each others business . And must go beyond the hype and ensure that it is not the innovation goes to die. Just because we may not fully understand the technology proposal, it does not mean that we should immediately call for prohibition. Especially when the proposal is just that, a proposal. But lets face it, lets be honest, it is facebook. I am skeptical, we can either make you a political talking point where we can choose to conduct thoughtful governmental oversight. That is my hope for this day, is thoughtful government oversight. Weather facebook is involved or not, changes here, Digital Currencies exist, this technology is real and facebook entering into this new world is just confirmation. It is an enzyme turn government cannot stop those that have tried have already failed. So the question then becomes what are American Automakers going to do meet the challenges . And the opportunities, of this new world. Some politicians want us to live in a permission based society, where you must come to the government and ask for the blessing before you can even begin to think about innovating. Those are the politicians that would rather kill it before it grows. There are others who believe in the vibrancy of american ingenuity, and american innovation. David the off generations of present invaders, through competition and testing, tinkering and iterating, and to be clear, it is not about advocating for a break it and eager it out later approach. But when it comes to finances, we must ensure that consumers and investors are protected. So mr. Marcus, let us get to work and have that conversation. In turn, based off what we learned, determine whether or not the current Regulatory Framework is meeting the demand of new technology. That is why we are here today. I do not have a crystal ball, i have no idea if the room will lead to greater Financial Inclusion or movements costs, families could send money to each other morse cheaply and easily than they do today, or if it is just a ploy to shoot Facebook Twitter mentions through the roof. We will see. I do know this, republicans stand ready to work with innovators to successfully implement Response Technology here domestically lose out to other countries around the world. I asked my colleagues to join together and support innovation, ingenuity, and the entrepreneur spirit that this nation was founded upon. I am grateful for this hearing and i call upon i called upon john waters to start this i would like to balance my time to mr. Hill. This hearing touches on critical jurisdiction within the community, regulation, the use of and trading of crypto currency, and the intersections of Financial Data. We must ensure that we are asking thoughtful questions as we learn about and analyze rapidly emerging trends. As a former community banker, i understand the importance of appropriate regulation and balance to benefit American Consumers. Monikers we must concern ourselves that all companies are in full compliance of the lot. America is involving is evolving into a digital era and we must make sure that we are asking the right questions, trust that you should verify your faxing. Today we have two different panels. I want to welcome mr. David marcus, he has been ceo of culebra, identifies himself as working for facebook. Esther marquez has served as the Vice President for facebook and he has served as president of paypal and other companies. You are written statement will remain part of the record, you will have five minutes to summarize your testimony, have a yellow light that will appear when you have one minute remaining. I will ask at that time that you wrap up your testimony. Mr. Marcus, you are now recognized for five minutes to present your oral testimony. Thank you, chairwoman. For mchenry and members of the community, and the committee, thank you for the opportunity to appear before you today have been an entrepreneur products aimed at improving lives. I became the president of paypal, and moved to facebook to run messenger and block chain efforts. I described the mechanics of libra and today i want to explain why i am optimistic about what libra can offer the world. I want to make it clear that we recognize that we are only at the beginning of this journey. Chairman powell has said publicly that the process for launching libra needs to be patient and thorough, rather than a sprint to implementation. Reinforcing those views at his recent press conference, we strongly agree with them, we will take the time to get this right. We expect the review of libra to be among the most expensive ever, we are fully committed to working with regulators here and around the world. Chairwoman waters, speaking on behalf of facebook, i pledge to you that facebook will not offer the libra Digital Currency until we have fully addressed regulator concerns and received appropriate approvals. I would like to start by sharing the vision for which is intended imagine a daughter that wants to send money home to her mom in another country. Fourteen dollars on average will be lost. Can also take several days or even a week for the mother to receive the money, a delay that can prove disastrous in emergency. Lines may be long, connection points may be high crime areas, but it does not have to be that way you wouldnt it easier and safer if people could securely and inexpensively receive money through smart phones like they do for so many of . That is what is about, developing a safe, secure, low cost way for people to efficiently around the world promise, has founded the independent Libra Association with companies in payment technology, block chain Venture Capital industries, and nonprofits like womens world banking and staff from the Libra Association. We will govern the block Chain Network and establish the rules of the road to prioritize privacy and Consumer Protection, with safeguards in the Libra Network to fight Terrorism Financing and other financial crimes. We expect these safeguards will meet or exceed existing standards and improve the integrity of the Global Financial system. When fully formed, we expect the libra station to include diverse members. Facebook will only have one vote and will not be in a position to control the association. Nor will they spoke or the Libra Association decision themselves to compete with government currency or ontario policy. In fact we will work with the Federal Reserve and other banks to minimize the risk or interference of monitoring policy. Finally i would like to turn to facebooks role in realizing the potential of libra, facebook has established a subsidiary that will offer digital wallets on the ypres networking hearing consumers will be able to say, spend, and send libra right from smart phones. Will benefit from working commerce across the family of apps that it operates, it will be affordable and accessible, safe and secure, with strong safeguards to protect User Accounts and information. We expect that it will be governed by rules, administered financial regulators. The privacy of customers, it will not individual customer limited services such as preventing fraud or complying with the law i am excited about the potential, and i am proud that we have initiated i believe that if america does not lead innovation in Digital Currency and payments, others will, if the country fails to act we could soon see digital told by others with values dramatically different from ours. I believe libra can direct positive change and provide leadership consistent our values, i look forward to answering your questions. Thank you. I recognize myself for five minutes for questions. Mr. Marcus, facebook has 2. 7 billion users who trust you with intimate thoughts, pictures, feelings, ideas, and sensitive information. Yet at every opportunity to demonstrate growth, competence and responsibly, facebook has let us down, as i already noted, is because a long list of scandals including repeated failures to safeguard user data. You said that we dont need to trust facebook because only be one of 100 members in the libra. And they will manage this product. That is not entirely true, is it . The project was facebooks idea, and facebook is spearheading it, and recruiting partners, facebook subsidiaries will provide consumers with a digital wallet to store libra tokens. As i understand it, no member of the association has paid anything toward the project. So my question is, why should we trust facebook to do these activities . Trust is really essential, it is clear we have made mistakes, i believe we are owning these mistakes and working hard that, working hard all fronts. As far as the Libra Association is concerned, the way that this project has been developed, we have invested everything so far, in libra, and we have built code with technology, and we have donated the technology because it is no open source for the world to use and leverage. As a result, we are controlling the code base, by the time we launch, we will be one of 100 members with no special privilege, and as far as the wallet is concerned, i believe the idea here is that one day we will launch and suddenly 2 billion people will arrive on the on the wallet, this is not the approach that we are taking people have to open specific accounts. They will not be able to use facebook, they will have to open new accounts, in order to do that, they will have to upload a government issued id to identify to meet requirements. Mr. Marcus, i can appreciate that you understand the trust problem, given disregard for us law and massive scale, i think Foreign Countries will find it difficult to effectively regulate facebook. We have the authority to regulate you, and yesterday, the swiss regulate said that they have never been contacted by facebook about this project. Your response to requests for a moratorium on your activities by stating that you would continue to work with regulators before going forward, the regulators lack the authority to adequately oversee you, so how can you work with them to resolve concerns . Can you commit to this committee and stop dancing around questions here . Moratorium to ask inappropriate Legal Framework to ensure that you what to do, to serve the public. We are all in support of innovation. It is not ones file versus another. But if you talk to any member on this committee, they will know nothing about libra, they will know nothing about culebra, they will not know anything about how it is organized or the role that facebook is going to play in this Big Association that now has 28 companies and is looking to get 100 companies. And so, despite the fact we all support innovation and we all understand what is important, for our economy to grow, and for development of the future of this country, we need to be on top of and understand something as massive as this project. That does not say that we dont support innovation. With that i will turn it over. Please go right ahead. Chairwoman, i agree with you, that this needs to be analyzed and understood, and the proper oversight needs to be set up, before libra can lunch. This is in the spirit that we release papers early before any lodging, so that we could have the time to engage with the proper regulators and Central Banks, and lawmakers, to ensure that we will get this right, this is my commitment to you, we will take the time to get this right. The gentleman from North Carolina is recognized for five minutes. I read your white paper, i understand the nature of digital ecology and Digital Currency what is a libra . A Digital Currency, a reserve backed Digital Currency. Is that a security . We do not believe it is. Is a commodity . Congressman, based on current us law, i believe it might be a commodity. We see it as a payment tool. Is it in exchange for funding . An Exchange Rate of funds . It is not. It is not any of the above, in any pure form. It is designed to be a payment tool. A payment tool, okay. If it is none of the above in the current regulatory structure, what im really getting at is how do you comply with regulations . The way that we comply with regulations is in a number of ways, first, as far as the law is concerned, it is registered as a Money Services business with the treasury. It is applying for state licenses and will operate the same way that other logs operate. These are active conversations that we are having, notably with the working group of the g7, and the swiss financial regulator. There is tension between the notion of a decentralized currency or something decentralized and ultimately, privacy. And ultimately, Money Laundering. These stand in conflict with one another, very difficult things to resolve. In your white paper, you see after five years there will be a transition point. You will go from a permission based system permission free system. First transition, how do you record sale the need for controls, which allow you

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