Facebook's cryptocurrency boss, David Marcus, faced lawmakers for a second consecutive day on Wednesday, appearing this time before the US House Financial Services Committee.
One of the more insightful exchanges occurred when freshman Rep. Alexandria Ocasio-Cortez had the microphone and asked Marcus about the financial reserve that underpins Facebook's Libra digital currency.
Facebook has said that Libra will be backed by real financial assets, specifically a "basket" of existing currencies — such as the US dollar, the euro, and government securities — that will serve as the digital currency's "reserve." To calm misgivings about Facebook controlling the currency, it has stressed that Libra will be managed by a consortium of organizations.
But in a series of questions, Ocasio-Cortez made the point that the assets backing the Libra currency that set its value would be determined by corporations, most of which are profit-driven.
"So we are discussing a currency controlled by an undemocratically selected coalition of largely massive corporations," the New York Democrat said.
That's a potentially problematic issue, Ocasio-Cortez suggested, because a nation's currency is something that functions as a "public good" in the purview of a government, not for-profit corporations. And it highlights an aspect of Libra that could become a stumbling block for Facebook.
Here's the exchange between Ocasio-Cortez, or AOC, and Marcus:
AOC: This governance over the reserve is the Libra Association, correct?
Marcus: Yes, it is, congresswoman.
AOC: And so currently the Libra Association is governed by Facebook, Uber, eBay, Spotify, Visa, Thrive Capital, Union Square Ventures, and a handful of nonprofits as well as some other partners, correct?
Marcus: It is correct.
AOC: Were they democratically elected?
Marcus: No, congresswoman, but we hope that we will have the proper regulatory oversight, because we agree with you that this should have the proper oversight to ensure proper —
AOC: So who picked the founding members of this governance over the currency?
Marcus: Congresswoman, the membership is open based on certain criteria. The first 27 other companies that have joined are the companies that have shared that desire to come and build this network.
AOC: I see. So we are discussing a currency controlled by an undemocratically selected coalition of largely massive corporations. Do you believe currency is a public good?
Marcus: Congresswoman, I believe that sovereign currencies should remain sovereign, and we do not want to challenge sovereign currencies. We just want to augment their capabilities in a way that they can be —
AOC: But do you believe currency is a public good?
Marcus: Congresswoman, I believe that sovereign currencies are sovereign, and as a result they should continue —
AOC: So do you believe Libra should be a public good?
Marcus: Congresswoman, again, we will work with all of the regulators and address all concerns, and the regulators will determine —
AOC: I'll take that as a no. I should take that as a no?
Marcus: It is not for me to decide, congresswoman.
AOC: OK, I'll take that as a no.
