Hearing of the House Financial Services Committee - Committee Republicans Work to Facilitate Responsible Technology at Libra Hearing
Today's House Financial Services Committee hearing on Facebook's digital currency proposal, Project Libra, provided an opportunity for Republican committee members to "go beyond the headlines" as Ranking Member Patrick McHenry (NC-10) called for in his opening remarks. Republicans pressed Facebook's David Marcus on issues ranging from the association's plan to comply with existing regulation, to this project's potential to increase financial inclusion.
Committee Democrats continued their push for a "permission-based society," where government stifles innovation, rather than working to understand it and thoughtfully regulate. While many questions remain, Committee Republicans made clear that they stand ready to work with innovators to ensure consumer protection while successfully implementing responsible, and ultimately inevitable, technology here in the United States.
McHenry: "There is tension between the notion of a decentralized currency, or something decentralized, and ultimately privacy, and ultimately Anti-Money Laundering and Know Your Customer elements. These things stand in conflict with one another and are very difficult things to resolve. In your white paper, you say after five years there will be a transition point and you will go from a permission-based to a permission-less system. Post transition, how do you reconcile the need for controls, which allow you to comply with Anti-Money Laundering and Know Your Customer regulations, with that decentralized notion of a fully decentralized digital currency?"
Duffy: "What I fear, in a roundabout way, what's happening in China with their social scoring. With the right social score, you can get a loan, you can get an apartment, you can access the train. Maybe Facebook is doing that same thing, where, if you meet our social standards, which a lot of people here don't necessarily agree with your social standards though we use your platform, that's the way you access the network. So, we have to conform our behavior to the standards of Facebook to be on the network, where I think the right answer would be: everybody, if you're abiding by the law, has access to this system."
Hollingsworth: "Certainly, the fields of Indiana are far from Silicon Valley, but that is exactly something that they can sympathize with. The feeling as though they are on the outside of the financial system, or marginally hanging onto the financial system, or that the costs of using the financial system are very high to them. That's something that I hear every day all the way across the district and something that's been really important to this committee over a number of years and has done a lot of great work to try and right-size regulatory framework, help participants get into the market, and to enable or empower those Americans and those around the world that you mentioned as well."