Facebook, Zuckerberg Dig In for Long Haul on Cryptocurrency

Facebook, Zuckerberg Dig In for Long Haul on Cryptocurrency





Mark Zuckerberg

vowed to move ahead with plans to create a cryptocurrency-based payments network despite strong opposition from some lawmakers, sounding a note of defiance in a hearing where he and the social-media giant were pressed over issues of trust and credibility.

The harsh tone of questioning by members of the House Financial Services Committee on Wednesday illustrates Facebook’s delicate position. Mr. Zuckerberg and other company executives remain eager to enter new areas of growth and launch new products like libra. But three years after the 2016 election exposed the platform’s vulnerability to abuse, many lawmakers are increasingly uneasy about the company’s ambitions.

In its quest to launch a digital coin, Facebook is hitting a series of snags as companies pull out of the project and regulators question the social-media giant’s ability to manage a currency. WSJ’s Paul Vigna explains the global backlash against Libra. Photo: Debarchan Chatterjee/Zuma Press

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In histestimony, Mr. Zuckerberg defended Facebook’s goal to offer financial services to more than a billion consumers around the world through libra, a digital coin designed to be used to buy things online and off and send money domestically and overseas, while acknowledging the risks to meeting that goal.

“I actually don’t know if libra is going to work,” Mr. Zuckerberg said during the roughly six-hour hearing. Still, he pledged to refrain from participating in libra’s launch anywhere in the world unless U.S. regulators approved of it.

Since Facebook announced its vision for libra in June with a group of 27 other companies, U.S. legislators and regulators have voiced concerns about its effect on financial stability and data privacy. European officials have tried to halt its launch.

That criticism continued Wednesday, with many Democrats and some Republicans blasting the project. Other GOP lawmakers praised Facebook for trying to innovate.

“As I have examined Facebook’s various problems, I have come to the conclusion that it would be beneficial for all if Facebook concentrates on addressing its many existing deficiencies and failures before proceeding any further on the libra project,” said

Rep. Maxine Waters,

(D., Calif.), the committee’s chairwoman.

via newsapi.org

‘It’s a risky project and there’s been a lot of scrutiny,’ Mr. Zuckerberg said during the hearing.


Andrew Harrer/Bloomberg News

Rep. Patrick McHenry

(R., N.C.), the committee’s top Republican, said he had his “own qualms about Facebook and libra and the shortcomings of Big Tech.” But, he added, “if history has taught us anything, it’s better to be on the side of American innovation.”

Mr. Zuckerberg also heard rebukes about Facebook’s credibility broadly, which underpin many Washington policy makers’ concerns about its move into financial services. The company has been harshly criticized for its handling of users’ personal data and its role in the spread of misinformation.

Several lawmakers questioned Facebook’s ambitions to launch libra and whether it could safely manage to do so given its poor track record on handling user data and battling misinformation.

A number of Democrats asked Mr. Zuckerberg about Facebook’s decision to exempt politicians from fact-checking and other community standards, and how those rules reconciled with Facebook’s stated desire to minimize false information on the platform.

At one point, the vice chairwoman of the Congressional Black Caucus, Rep. Joyce Beatty (D., Ohio) called the testimony “appalling and disgusting” after Mr. Zuckerberg gave a halting answer about details of the company’s work with civil rights leaders.

“Have you learned that you should not lie?” asked Rep. Nydia Velazquez (D., N.Y.), pointing to a fine Facebook paid European regulators, who accused the company ofproviding misleading informationabout its acquisition of messaging unit WhatsApp.

Mr. Zuckerberg said he disagreed with her characterization, but added, “I understand that we have work to build trust on this.”

Facebook has said it would exempt politicians from fact-checks on the grounds that such comments are newsworthy, and that it is working with civil-rights communities on issues of voter suppression and other abuses of its platform.

Ms. Velazquez asked Mr. Zuckerberg to wait until Congress created a new regulatory framework for libra before moving forward. He responded that Congress already has oversight of the regulators Facebook is working with and that he thought that was sufficient.

It wasn’t clear which regulators Mr. Zuckerberg was referring to. Rep. Carolyn Maloney (D., N.Y.) asked Mr. Zuckerberg whether Facebook would get the blessings of agencies like the Federal Deposit Insurance Corporation, which supervises deposit-taking banks, and the Federal Housing Finance Agency, which oversees mortgage giants

Fannie Mae


Freddie Mac.

The Wall Street Journalpreviously reportedthat before libra was unveiled, Facebook executives met with officials from the Federal Reserve and Treasury Department and responded to many questions by saying details would be ironed out later.

“All of the regulators that have jurisdiction over a part of what we are doing, we are working with them and will seek approval from,” Mr. Zuckerberg said.

The group of companies that Facebook assembled to launch libra, the Libra Association,lost one-quarterof its original members, including




PayPal HoldingsInc.

since the June announcement. Those companiesfaced pressurefrom regulators and politicians to explain how libra could be prevented from being used to launder money or finance terrorism.

Rep. Ann Wagner

(R., Mo.) asked Mr. Zuckerberg why those large U.S. financial firms had dropped out of the project. “It’s a risky project and there’s been a lot of scrutiny,” he replied.

“Yes,” Ms. Wagner said, “it’s a risky project.”

—Deepa Seetharaman contributed to this article.

Write toPeter Rudegeair at[email protected]and Ryan Tracy at[email protected]

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