Facebook grilled by US Senators around Libra's 'trust' issues

Speaking at a Senate hearing yesterday, Facebook head of Calibra David Marcus, said he expects the pre-launch oversight by regulators and central bank over the company's cryptor wallet Libra, to be "the broadest, most extensive, and most careful" in fintech's history. This comes as several US senators expressed distrust for the company, calling Facebook "crazy" and "delusional" for venturing into the finance and banking space.

"We know we need to take the time to get this right. And I want to be clear: Facebook will not offer the Libra digital currency until we have fully addressed regulatory concerns and received appropriate approvals," said Marcus, according to a released transcript. Meanwhile, senators said the company does not "deserve" trust after its spate of scandals and should be "cleaning up its house" instead of launching a new business model, several media outlets report.

While Facebook do not expect Calibra to make money at the outset, Marcus said the digital wallet is likely to drive increased usage of the social media platform and yield greater advertising revenue as a result. He explained: "It will allow many of the 90 million small- and medium-sized businesses that use the Facebook platform to transact more directly with Facebook’s many users, which we hope will result in consumers and businesses using Facebook more."

However, according to Marcus, the main goal for Facebook is to create utility and adoption, enabling the unbanked and underbanked globally to take part in the financial ecosystem. He added:

Calibra customers’ account and financial information will not be shared with Facebook and as a result cannot be used for ad targeting.

Responding to the scepticism, Marcus said the company agrees with the Senate that the review has to be thorough and has published a white paper introducing the Libra project in that spirit. He explained that Libra aims to provide a "more efficient, low-cost, and secure alternative" for people around the world to use and transfer their money.

"I believe that if America does not lead innovation in the digital currency and payments area, others will. If we fail to act, we could soon see a digital currency controlled by others whose values are dramatically different. I believe that Libra can drive positive change for the many people who would benefit from it," he said.

Facebook recently announced the formation of Calibra, a Facebook subsidiary whose goal is to provide financial services using the Libra Blockchain. The first product Calibra intends to introduce is a digital wallet for Libra that will be available in Messenger, WhatsApp, and as a standalone app. The Calibra wallet will let users send Libra to almost anyone with a smartphone, similar to how they might send a text message.

Marcus said the wallet will "ultimately be one of many services, and one of many digital wallets" available to consumers on the Libra network. Libra Blockchain will exist as an open-source ecosystem, businesses and developers around the world are free to build competitive services on top of it.