Facebook’s Zuckerberg Defends Digital Currency Plans

Forbes 1 month ago
Congress Facebook Zuckerberg
Facebook Chief Executive Officer Mark Zuckerberg arrives for a hearing before the House Financial ... [+] Services Committee on Capitol Hill in Washington, Wednesday, Oct. 23, 2019, to discuss his plans for the new cryptocurrency Libra. (AP Photo/Susan Walsh)

Facebook CEO Mark Zuckerberg is heading to Capitol Hill on Wednesday for what figures to be a contentious meeting on the social network's proposed entrée into the payments business.

Zuckerberg will likely face tough questions about his company's planned venture into the digital currency realm, a project called Libra that aims to make sending money "as easy and secure as sending a text message," as Zuckerberg says in his prepared testimony.

Zuckerberg's appearance comes at a time when many lawmakers — and consumers — have soured on the social network, which has come under fire for a cavalier approach to privacy and failing to sufficiently police the content on its platform.

Facebook has acknowledged many past mistakes — some documented in a $5 billion settlement with the Federal Trade Commission involving privacy violations — and Zuckerberg comes to Congress with an air of humility regarding the virtual currency.

"I believe this is something that needs to get built, but I understand we're not the ideal messenger right now," Zuckerberg says. "We've faced a lot of issues over the past few years, and I'm sure people wish it was anyone but Facebook putting this idea forward."

But Zuckerberg called out a "stagnant" financial industry that is not meeting the needs of the untold millions of people who struggle to send money home to family living abroad.

"The current system is failing them," Zuckerberg says. "The financial industry is stagnant and there is no digital financial architecture to support the innovation we need."

Zuckerberg also warned of the "risks of not innovating," noting that China is "moving quickly" to develop a similar system, but that Libra, as envisioned, would be "backed mostly by dollars."

“If America doesn’t innovate, our financial leadership is not guaranteed," he says.

However, the CEO is likely to face tough questions about its proposed foray into the financial services sector, as well as allegations that it has enabled discriminatory housing practices, an antitrust investigation involving 47 state attorneys general, election interference and other issues.

Maxine Waters, the California Democrat who chairs the House Financial Services Committee, called for a "moratorium" on Facebook's plans for a digital currency and digital wallet.

Waters professed "serious concerns about your plans to establish a global digital currency that would challenge the U.S. dollar," Waters said, raising the possibility that Facebook should be broken up on antitrust grounds.

Meantime, the ranking Republican on the panel, Patrick McHenry (N.C.), warned in his opening statement that the hearing amounted to a "trial on American innovation,” acknowledging that he has reservations about the outsized influence of the tech sector but cautioning against the government preemptively weighing in to squash initiatives like Facebook's digital currency proposal.

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