Switzerland surprised to hear it will be regulating Facebook's cryptocurrency

Facebook Libra

David Marcus, who heads the Menlo Park, California-based firm's digital wallet, Calibra, was peppered with questions on how Facebook would protect consumers who use the product and whether it could undermine global currencies or contribute to human rights violations. Democratic Senator Sherrod Brown of OH said the country would be insane to trust Facebook with its money, and his Republican colleague Martha McSally of Rhode Island agreed that the site needs to do more to gain the public's trust.

The hearing mostly centered on trust issues, particularly as the social media giant has been found violating user privacy in the past.

"I think you're pretty low on the trust spectrum right now, and understandably", Rep. Vicente Gonzalez, D-Texas, told David Marcus, the Facebook executive leading the project.

Facebook Inc. took a beating for a second straight day over its controversial cryptocurrency plans as Democratic lawmakers argued the proposal posed vast privacy and national security risks.

Rumors had surfaced as early as past year that Facebook was working on a digital currency, but news that the project was in its advanced stages started to emerge only in recent months. "Do you know what that term is?" she asked Marcus.

Democratic representative Carolyn Maloney pushed Marcus to commit to a Libra pilot program with one million users overseen by U.S. financial regulators, including the Federal Reserve.

With Marcus' repeated attempts to avoid committing to the pilot program, she finally said that if Marcus can not commit to doing a pilot program first, Congress should consider stopping the project altogether.

Marcus also sounded a familiar theme for the company: if Facebook does not build the technology of the future, someone else will. Marcus mentioned multiple times that he believes the US should be a leader in creating a new global currency - something that other countries will try to do without USA input, he added.

Moreover, answering a question whether Calibra will make data about their users' transactions available to the Internal Revenue Service (IRS), Marcus said that now taxpayers are obliged to report their transactions by themselves, however, the Libra Association is "happy to work with the IRS" in order to lift this "burden" from Calibra users.

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Earlier on Monday, US Treasury Secretary Steven Mnuchin said he was "uncomfortable" with Libra.

In a rare endorsement of Trump's views, committee Democrats projected his negative tweets last week about cryptocurrencies and Libra on a giant electronic screen in the hearing room.

"Nor will Facebook or the Libra Association position themselves to compete with sovereign currencies or interfere with monetary policy".

Central bankers say that if Facebook wants to take deposits, it needs a banking license, which would subject it to the strict regulation that goes with operating in that industry. Marcus said that Calibra is hoping to offer little to no price at all between consumers and a small fee for merchants.

Since the Libra would likely hold the dollar, euro and other major currencies as reserve assets, the impact could be significant in "emerging markets or developing countries where people want to get rid of those currencies", Chorzempa said.

"Ultimately, if Facebook's plans come to fruition, the company and its partners will yield vast economic power that could destabilize currencies and government. We're owning these mistakes".

Rep. Tom Emmer, R-Minn., said the legislation Waters is proposing to ban big tech companies from banking "has no constitutional basis".

Facebook has said it is not going to launch its digital coin Libra unless regulators are fully satisfied and all necessary approvals are in place. Sherman, who claimed Libra should be called Zuck Bucks, went on to claim that terrorists love cryptocurrencies as well as "drug dealers, tax evaders and sanctions evaders". "This is an attempt to transfer enormous power from America to Facebook and its allies".

"Change is here. Digital currencies exist", he said.

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