Senate To Question Facebook About Its Upcoming Cryptocurrency 06/21/2019

In response to its forthcoming cryptocurrency, lawmakers have invited Facebook to Capitol Hill. On July 16, Facebook executives are expected to appear before the U.S. Senate Banking Committee.

Facebook has not said who it plans to send to Washington, but one obvious choice is David Marcus, head of the company’s blockchain business.

Facebook unveiled specifics about Libra, its highly anticipated cryptocurrency, earlier this week.

Upon its expected launch in 2019, anyone with a smartphone will be able to send and receive the currency. Users will be able to conduct transactions with virtually no fees.

The blockchain technology will be overseen by a newly formed Facebook subsidiary dubbed Calibra.

Consumers will be able to spend Libra using a Calibra wallet — a standalone app that will connect directly to Messenger, WhatsApp and Facebook’s flagship app — or participating third-party wallet apps.

Through the so-called Libra Network, Facebook eventually plans to offer a slew of transactional options, from paying bills with the push of a button to buying a cup of coffee with the scan of a code.

Shortly after Facebook’s announcement, this week, French Finance Minister Bruno Le Maire said only governments can issue sovereign currencies, reports the Associated Press.

In the U.S., Rep. Maxine Waters (D-Calif.), head of the House Financial Services Committee, said Facebook should delay Libra until it can be studied by Congress and regulators.

Analysts see the debut as Facebook’s most forceful move into ecommerce to date.

“Facebook has its eyes set on becoming the world’s leading ecommerce platform,” Moffett Nathanson analysts declared in a client note. Calibra could eventually replace advertising as Facebook’s financial driver, other analysts speculate.  

“We believe this may prove to be one of the most important initiatives in the history of the company to unlock new engagement and revenue streams,” wrote RBC Capital Markets analysts.

The question is whether Facebook can be trusted with the key to consumers’ financial lives.

Facebook won’t be controlling the currency on its own. Libra will be governed by an independent association based in Switzerland, whose current members include various financial giants, such as Visa, Mastercard and PayPal, as well as Uber and other high-profile companies.

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