Takeaways from Zuckerberg’s upcoming Libra testimony

Tomorrow, CEO of Facebook, Mark Zuckerberg, will appear before the House of Representatives to further explain Libra’s goals and argue against its criticism. Zuckerberg released his written testimony to the public today which answers many questions and speculations. 

Libra wont release until U.S. Regulators approve it

This week, David Marcus, head of the Libra project admitted that the Libra Association was playing with the idea of using multiple stablecoins instead of one backed by many. 

One of the obvious reasons to do this is so the Libra platform could be released in other countries while regulators in the U.S. hash out details. 

Even though Zuckerberg is afraid that China’s digital currency will beat Libra to its primary use cases, the Facebook CEO still values regulators approval. 

“Facebook will not be a part of launching the Libra payments system anywhere in the world unless all US regulators approve it. And we support Libra delaying its launch until it has fully addressed US regulatory concerns.”

Zuckerberg plays to the U.S. fear of losing financial leadership

A Federal Official from the Federal Reserve Bank of Dallas recently spoke about the possibility of a digital dollar. His statement came shortly after a former CTFC Chairman wrote about how creating virtual USD could help the U.S. maintain its status as the world’s reserve currency. 

Zuckerberg plans on following suit by warning congress about China’s innovation and what the U.S. risks by waiting it out. 

“Libra will be backed mostly by dollars and I believe it will extend America’s financial leadership as well as our democratic values and oversight around the world. If America doesn’t innovate, our financial leadership is not guaranteed.”

Libra “is not an attempt to create a sovereign currency”

Zuckerberg wrote that it’s just a way to transfer money. Libra has no intention to compete with central banks even though one of the first lines from the testimony was mentioning that more than 1 billion people don’t have access to a bank account.

His only argument against banks is that they make it hard for people to send money across the globe at low costs. 

“We expect the regulatory framework for the Libra Association will ensure that the Association cannot interfere with monetary policy.”

They will be cooperative with identifying money laundering and terrorist funding

Since Libra will comply with KYC (Know Your Customer) regulations before people exchange fiat for Libra, they will have all the information needed to track transactions.

“A digital payments system with regulated on- and off-ramps and proper know your customer practices is easier to secure, and law enforcement and regulators can conduct their own analysis of on-chain activity.”

Being KYC compliant means that Facebook will require things such as social security numbers, drivers licenses and possible inquire about employment status and reasons for purchasing Libra before allowing users to join the ecosystem.