We will be active in payments services, congresswoman, and enable all of these people who dont have access modern Payment Systems to move their money around and have access to World Economy and will be in the payments business, as far as colibra wallet. Let in ask you another question on governance. In your open statement you said it would nothing be overpowered by facebook because you would only have one vote. So, in the world of banking, because in my mind its still banking, were dealing with a lot of banks who merged so lets sea with your one vote you would buy stripe or you would buy spotify. Would that now just give you the one vote or guff you more control . Because we know these things merge and get bought out all the time. So if you bought to the things would that give you more power. It would not, congresswoman, because in the way that the governance is currently structured no one entity can have more than one voice or one percent of the vote. So let me go to someone asked bit the training and Financial Literacy. We know those who are unbanked or underbanked are that for a rope. This is very complicate. The best mind here on both side and clearly thats a lot of unkansassed questions and you can tell from our questions theres a lot of disagreement with this. How do you take somebody from any district who i underbanked or unbanked and educate them. No Financial Literacy and they think youre a bank because even when you mention paypal and those systems which you their president of dish use paypal as a store owner but tied to my credit card, it was tied to the regulations of the federal government. So, how do you tell us that its not banking . Because if its not tied to any of those things, how does it work . Congress com where is my protection . What happens if do this and we already know im ignorant and then i want my libras back. Can i get them all back . Yes. With no problems, i can get them back. Yes in the same way that paypal and others are connected the Banking System my time is up. I yield back. Thank you. The gentleman from texas, mr. Williams, is recognized for five minutes. Thank you, madam chair. I want to echo the comments that thats hearing seems premature so far private companies are beginning to form an association. We talk but a 12page white paper described in the general idea of this global cryptocurrency. Theres a lot more work to be done internally at libra before we and congress can examine to all the hurdles were concern but that you hear from both sides. Many more processing the pressing issues we need deal with before we go home for the august reassess. We havent acted on the impending debt ceiling the reckless government spending, still no budget deal no xm authorization bill that has businesses all over the country nervous and were the beginning of Hurricane Season and cant get the Flood Insurance package to a vote on the floor. I understand the interest is in this idea but our time would be much better spent on issued that will benefit the American People immediately rather a hand trying to stop this idea from being explored by facebook and other industry participant. We should not discourage the private sector. We should not discourage the private sector investing their own time and money to research new tech knock. No matter what policies we enact the private sector is the engine that creates solutions to some of the great problems and mr. Marcus i applaud your entrepreneurial spirit and it leads know believe youre probably capitalist, are you not . Thats a yes or no. I believe we all are in this country. Thats good. Helps our record the. And also so with that in mind would you believe that the private sector rather than the government is better sueded to consider the potential of block kahne technology in the Financial Services space. I believe in this pick case, it requires both the innovation capabilities of the private sector and the oversight of the government and regulatory buddies for this project to be successful. To facebook already stated i wont launch the cryptocurrency in india due to regulatory issues. Can you explain the issues in india and do you anticipate you will not be able to launch this project other countries. Congressman, there will be countries in the which the colibra wallet itself will not be able to operate. But since the network is interoperable and other wallets can emerge in different regions and transactions are possible between wallets, unlike the Current System which constrains transactions within one wallet, we believe that others will emerge and other countries that will enable access to greater number of people who dont have access to modern Financial Services. Something i saw in your white paper is that Libra Association will be run as a nonprofit. Yet ill will pay dividends to investors who provide capital to jump start the ecosystem. Can you go into greater detail on how you reconcile the negotiation being a nonforecast yet you will pay dividends to the investors. Yes, congressman. The association is a nonprofit membership based association under the laws of switzerland that are slightly different. With that being said, if and the goal force the association is not to generate a property but if it has to pay out income streams it will pay taxes on those income streams as covered by the swiss law. As a Small Business owner im a main street america guy. 50 years in business if see the benefit on remittans payments to other countries and with the lowering traction s satisfies costs so theres no reason we should stop the idea. With that being said i get concern if the were going to be used in lending. Is the eventual goal use cryptocurrency for lending . Congressman, as far as the he colibra wallet is concern it doesnt have any plans to do so. As of now. I do believe that there might be banks around the world that might want to engage in those types of services but this is the province of banks and not something that the colibra wallet will do itself and is not in the plans right now. Real quick. The white paper states the libra allows you to hold one or more addresses not linked to their real world identity. How will you strike the correct balance between the privacy and the years able to hide criminal activities. Im glad you asked this question because i think this is misunderstood. The fact theres no personally identifiable information on the block kahne is not virtue of the fact that people are not identified on the flat iter. Just it would be irresponsible to have personal data possibly available. That being said while its on and off ramps will be regulated. Yield my time back. Thank you for being here today. The gentleman from guam was also the cries chair for the committee on finance services, recognized for five minutes. Thank you, madam chair. Mr. Marcus, what the Organization Project average user will have as a libra balance . Congressman, we have not projected average babies dental balances thats week you you expect me to believe that . Fibs builds on the average number of hit, visa, mastercard, huge players are signing up and you have no idea how expect oh have in the average libra account. Congressman it will really vary denning wrong the usage of libra, the currency and the can you give me a low estimate and a high estimate of what the variation is expected to be. Congressman, with heat not made projections for this but we would be happy to follow up with your office and team when we do. First of all, im absolutely disbelieve that. Like i said those associations are built around understanding their users and what theyre anticipated their use wam will be and youre trying to hide that figure because when you do the math its very alarming. Y ore own posts you mentioned that bills of users billions of years. He we firmly believe is lieb brace successful can be a nonlinear step change for billions who need it the most. So talking about 100 in a libra account youre talking 100 billion. A thousand dollars in libra account, if youre talking about 10,000 in a libra account. And so i think that the amount that were talking about in terms of average user is critical in order to understand the full scope of how pervasive this kind of action is going to be and i want to go through why that so critical. You have 20 Founding Members. A lot of big shot companies that have come together, seem iing overnight and under the radar and the white paper you submitted says youll have 100 members and n the second half of 2020, which is a year from now. Thats 72 members. Youre going to triple your growing in one year and you dont even know what the average libra wallet will hold. Just going to pretend that figure is some unknown number but were going to bring in 72 new players. Are any of the new players fortune 500 companies. Yes, congressman. How are you able to convince visa and mastercard and new fortunate 500 companies to sign up to something without know the average user rate. I want to respect any say im not hiding anything. Im here responding truthfully to all the question is have with the information i have. Since by, i think we can all be sensible people and you wont get Huge Companies signing up if they dont understand what theyre signing up for. The reason why this is so critical when you have even facebook ablown in your own posts you said you have 90 million businesses on the facebook platform that are going to be able to attest how this will be something that is going to be an empowerment for businesses and thats the facebook platform. Not talking about 72 other companies lining up without any kind of idea how much theyre going to be getting involved with. And this is so important because talking about billions of users and tens or hundreds of dollars. Thats money thats getting suck out of the u. S. Financial system and being put into whatever this cabal is put together in terms plebe bra and colean bra. When the u. S. Military operations and national security. If that is going to be the case, how do we put a stop to . Lets say we have hundreds of millions of users in the u. S. , and they all put in thousands of their own dollars. How do we put a stop to it when the risk presented itself . If the risk relent itself, what happens then . If you think that the congress or the elected leaders are going to put a stop to it, when you have hundreds of millions of users in thousands of districts, it is going to be next to impossible politically do that. The gentleman from georgia is recognized for five minutes. Thank you, madam chair. Thank you for being here. It has been a long day. I want to thank you for not only your time being here, but the willingness to look at new ways of doing things. That has been the strength of our country. Quite frankly, i do not care for facebook. It is a nightmare for many of us in this position. I do not care for some of the filtering that is done. Suppressing some of our posts because of political content. You are private business. It is your right to do so. I do appreciate anyone who challenges the status quo to look for something new and a better way of doing it. We have concerns. I think this is a platform where we can address those concerns. We can begin a dialogue. What you are experiencing right now has been experienced through any innovator throughout history. The Washington Post in the early eight early 90 hundreds had an article entitled, man will never fly and should not. It went through all of the reasons why we should stop testing an airplane especially when you have two bicycle candidates in dayton, ohio when scientists could not. Thomas edison, there were dozens and dozens of articles written on how the lightbulb was dangerous if it was ever accomplished and would be a Public Health threat and should be stopped immediately. All of those ended up being great advancements that rightfully so, as regular did by government for those Public Safety and Health Benefit reasons that it could be done safely. The point is, we cannot demean these things until we actually look into them. I have concerns. Unless i am willing to ask the concerns, and i am willing to hear your answers, we are getting nowhere. One of the big concerns of mine, spending time in the i. T. Industry and Data Security is, cryptocurrency is used for illicit financing. Money laundering, terrorism, financing human trafficking, it is estimated criminals use cryptocurrency to steal 1. 7 billion from investors just last year. The that happened in in the United States. The treasury secretary is concerned libra can be used for these purposes. How can you assure us and the American People this is not going to be another illicit financing tool . Congressman, thank you. I share this concern. This is something i care about personally a great deal. Share the concern and this is actually something that i care about personally a great deal. I dont want the creation that we are working towards to be used for those type of purposes at all. And we believe that with the appropriate controls, with a proper a and l programs, a proper ky tea on and off ramps, that we will improve on the Current System. Theres a lot of illicit activities that are currently happening on our existing Financial System and i actually believe that with a combination of the right technology and ability for Law Enforcement and regulators to also have a view into some of the movements that we will improve on the efficacy of aml and counterterrorism funding programs. Some of the pushback weve gotten from Law Enforcement, ive been anadvocate for looking at block chain or the technology. A lot of folks here have a fear, some justifiable fear of crypto currencies. When you remove the stigma of crypto currency i think locke jane is a validtechnology we can look at for Data Security but we get pushback on the use of block chain. Have you had engagement with Law Enforcement on this and if so what are their thoughts, their concerns, their acceptability . How are you going to do that interface . We will continue to engage notably with the Treasury Department and notably the department that looks after moneylaundering and counterterrorism funding with undersecretary medical care and her team and also globally with a number of Law Enforcement and regulators. With the remaining time i have i have questions i could submit for the record but you basically, its going to be a global Payment System which is regulated as Central Banks are done. Pretty heavily regulated. Would it be appropriate for fsoc to the registry libra as systemically important as it should be . Its not for me to say we should regulate us but we been engaged not only fsoc but all the agencies under the fsoc umbrella and we will engage mostly in Payment Services but its not for us to determine. Thank you. The gentleman from massachusetts, miss presley is oversized for five minutes. Thank you german waters, i appreciate your leadership in returning this committee to its oversight role and i want to emphasize to you Mister Marcus and to my colleagues on both sides of the aisle the reason we are here today is oversight. Or more accurately the lack of oversight in this space. The fact that we have arrived this far along in the conversation without any regulatory guardrails to inform the development of this project on its face, just that fact alone is a problem. It is long past time we stop compromising on consumers privacy and the pursuit of profit. Whenconsumers wellbeing is on the line , echoing the sentiments of the gentleman from arkansas we cannot afford to simply trust, but not verify so thats what were here to do today. That is to verify. Mister marcus, yes, sir no sense my time is short, are you familiar with the content of facebooks press release announcing the launch of libra . I am congresswoman. Grade, at the end of your press release there is a disclaimer that states and i quote, these forwardlooking statements may differ maturely from actual results due to a variety of factors and uncertainties, many of which are beyond our control. Unquote. In it you go on to admit that this is all based on assumptions that you believe to be reasonable, unquote. As of the date of this press release. Chairwoman, i ask for unanimous consent to submit to the record facebooks press release announcing the launchof libra. Without objection, such as the order. Yes, sir no, would you trust your money with a company that essentially admits its just winging it . Congresswoman, i dont believe that is the case and this is why weve shared our white papers. Reclaiming my time. Disclaimer ends by saying that quote, you undertake no obligation to update these treatments as a result of new information or future events, unquote but again moving on, on the issue of under banking which is an issue this committee is very committed to addressing under the leadership of chairwoman waters, a representative was siding in a white paper would identify 1. 7 billion people globally who lack access to Financial Institutions. That is a lot of people. Of all adults who dont have Bank Accounts are living in just seven countries. Bangladesh, china, india, indonesia, mexico, nigeria and pakistan. Yes, sir no, are any of libras 27 Partner Organizations based in these countries . Not at this stage congresswoman but by the time we get to 100 members we hope to have a more representative slate of people that we want to serve. Mister marcus, do you believe as it has been claimed authentication is a reason many of these people dont have Bank Accounts . There are a number of issues but yes identity is an issue and a greater problem. The same bank report finds that two thirds of people who dont have Bank Accounts say its because they lack enough money to open one hears a rapidfire around for you Mister Marcus, does the libra require a bank account, yes, sir no . Know, congresswoman. Does the libra wallet require a smart phone . Yes, and now you can buy one. With these users be paid any interest on the number they store in libra currency . Congresswoman it is like cash and as a result it doesnt earn interest. So your solution to the world on back is a currency that requires them to have a bank account, smart phone and no return on their savings. Im not sure you really understand what the source of and root of the problemreally is. Its clear to me when it comes to facebook and its initiatives we cannot trust or verify but i would add and underscore the reason we are here and that you even have this opportunity to pursue is because the Federal Reserve has failed because theFederal Reserve has failed , too often americans, a equitable reliable, efficient, safe and secure system to access and move theirmoney. I yield. Yelled back. Thank you. The gentleman from ohio mister davidson is recognized for five minutes thank you madame chairwoman, i appreciate you holding this hearing today , a Bipartisan Group of our colleagues have worked for two years trying to provide light touch certainly to many aspects of this market. Mister marcus, i appreciate your being here on behalf of facebook and in some ways representative from the Libra Association because you brought to the worlds attention a space that previously has been dynamic in the american market, lots of american innovators but you see a lot of companies leaving the us market for switzerland, for singapore, for others, not to avoid us laws but find the regulatory certainty that weve highlighted does not currently exist in the United States today. So with that madame chairwoman, my hope is the committee will hold future hearings on crypto currency regulation and we can properly address these issues and as weve seen not entirely complete them with facebooks mixed messages here or mixed history across numerous other platforms, if they are platforms. Already there are several legislative proposals in congress that address the crypto currency sector including the taxonomy act, a bill i am leaving alongside colleagues, bud and gabbard and john rose. So with that, one of the key differentiators with libra as a currency from many other tokens in this space is decentralization. When you look at an open block chain to or look at the coin that has come to represent the entire blockchain to many people, the architecture is the internet, the specific instance is a website so people know this famous website bitcoins but theyre not really able to associate the broader architecture of blockchain and just like facebook launched and many other things will continue to launch, when the internet was in its early stages we couldnt conceive of all the specific instances that would take place on the internet and the block chain space, in the tokenized economy, where not really yet able to foresee all the specific applications. Thats why i think its very important we continue to hold hearings on the topic. Tokens can represent title to the car, the land, software license, goods or services but what youre proposing a different currency. Its not just the paper system, libra is a Payment System but you want to do it in a waythats different from the legal means of exchange. A store of value, not yet legal tender, not required to be accepted everywhere but this is how is this different than what youre seeing with the International MonetaryFund Proposed as a synthetic currency . ,one, the first big difference is that unlike the fdr that you reference, this Digital Currency will be available to consumers and will be designed as a medium of exchange from the ground up. I dont think thats different at all, its just whether the central bankers, Libra Association or imf, they still have a central banker. If you think of it as a back in the sense of that central authority, the idea the Libra Association could ever become decentralized i think gives a lot of people pause because you intend to have it not just to a bundle of currency, but in the white paper shortterm securities. Currently under us law, if you are trading in securities as the underlying basis for the assets that youre selling, thats regulated as a security. So why would it not be considered a security . Do you have a special facebook clause . No congressman, selena and the reason we believe that libra is not a security is because it is designed as a payment tool and. Frequenting my time, owners have posited there are several stable coins which this isnt entirely stable because its nominated in other things, could be characterized as swabs or demand notes, both of which are treated as securities. The fccs head of Digital Assets confirmed that a hearing last week it does not matter that the stable point does not have an expectation of process. The expectation of profit is key because of the structure of it. And in the case here, it would be regulated as a security area that setting that aside we look at the other issues, the board and im going to have to submit a ton of these in terms of questions. When you look at the know your customer provisions, and i listen to so many of my colleagues talk about how we are going to approve a sit finance, i look forward to seeing Terry Minchin or powell asked how were going to regulatethe dollar. Mister duffy had an exact right point and if you have facebook or the Libra Association presume to say over top of this and filter transactions the same way that you filter content on your alleged platform , i think the public is going to be out. Lastly, you plan to launch this outside the United States if you cantget regular tory certainty in the United States. Sorry, im glad you asked the question and we will not actually proceed until we get all of the concerns addressed in the proper regulatory aspects. My time has expired gentleman from new jersey is recognized. Thank you madame chairwoman and Mister Marcus, thank you for being here today laying that it nearly legal venture is motivated in part by a desire to serve on back. I appreciate his motivation but im confused on how your product will help the under bank given that the unbacked are operating solely with cash, how does a person who is unable to open a bank account to be able to opening the account, convert their cash to libraand transmit those libras to third parties. You for your question congressman. A lady wallet will approach this is in partnership with agents cash in and cash out agents in the relevant countries where banking penetration is very low and as a result, consumers dont have Bank Accounts will have the ability to access Libra Network and buy and sell libra. Its nice to have a center where they would go to to convert so that they wouldset those up. We would use existing networks of cash and in that cash out. This is speaking for the libra wallet. Thank you. I think we agree on a key point that Blockchain Technology is inevitable and i believe its the new frontier prevented by block chain and an opportunity for american leadership, Economic Growth and versus losing out in disgust to china and to europe and others read in my district, the Fifth District of new jersey so many people work in the Financial Sector on the cutting edge of Financial Technology and it can be a tremendous job creator forthe state. We also agree we need to create an environment that encourages technology to start here and create us jobs rather than going overseas so the Libra Association is composed of 28 American Companies, im deeply concerned that libra will be based in switzerland as youve also heard. This is a big concern of ours so echoing mister davidson and others would you agree part of the reason you made the decision was not to avoid guardrails but instead to avoid the lack of legislative certainty we have in the United States . Congressman, thank you for raising this because the shortchanged had nothing to do with us invading our responsibilities or oversight but we wanted the Libra Association and the libra Digital Currency to be recognized globally as a unit of measure that was acceptable and as a result switzerland offered the International Platform to doing that and we hope that one day many years down the line at the Libra Association can work very closely with organizations such as in geneva like the wto, the lack of International Government in basil. Weve heard quite a bit many of us, im impacted a little bit more and why mister davidson and i and others are working on that act which is Bipartisan Legislation as you heard which provides rules of the road for blockchain with a light touch, but we face American Innovation so weve heard, part of our goal because Many Companies that have been to our offices say we need some certainty here, we need some guardrails. Maybe its not facebook but others have sent to us the reason were going elsewhere is because we dont actually know the rules of the road here. Have you heard that . It may not have factored into your decisionmaking in that direct case but is that something you heard from partners you talked to . Yes, ive heard from Different Companies in this space that Regulatory Priorities would be helpful. I know you seen our piece of legislation, are there other things you think we should be doing to help the United States establish itself as a globalleader on crypto currency, other steps we could be taking in this body . I think the first thing we can do is ensure that projects that are within the right oversight and done responsibly actually see the light of day instead of losing our ideas to other nations that are plowing ahead. That is one of the concerns is losing that space but also making sure that our people dont as you pointed out,dont evade whether its on privacy issues or others , evade us jurisdiction just to do that and i think its a big concern. I dont of me and many of my colleagues and this affects a lot of people and as i pointed out the unbacked and the under bank. Im worried about as time goes on how do we make sure that we dont abandon them in this process. Its very important as we grow. Ideal back, thank you very much madame chairwoman. The gentleman from North Carolina mister byrd is recognized for five minutes. Thank you madame chair and i think its important members of this committee be able to differentiate between libra which is an understanding is not truly crypto currency and other tokens like that pointbefore discussing legislation. And i would encourage members to use outside groups like coin center, blockchain association, digital cameras resources. Both are helpful and provide a lot of clarity and optics like this require a different sort of regulation so the more educated we become the better. So if america is to remain continue to grow in being a world leader in financial innovation and technology, its vital this committee not embrace reactionary laws against crypto currencies or even this, libra. But we must differentiate between libra and similar tokens, two bit coin from libra. Mister marcus, i want to talk about the issue of libra remaining politically neutral and i know this came up yesterday in the senate and my colleagues have gone before me including mister duffy , bar and davidson and others have raised concerns on this and i share those same concerns. Do you have guidelines in place at this point in the process on how you will maintain political neutrality on your platform and if not, will you commit to us today that you will develop guidelines and those guidelines transparent to the public mark. Its an important question congressman and there are two parts to this answer. The first is the Libra Association and believer association will naturally not have oversight. Or decisionmaking around how libra can be used as long as its lawful uses. And then the second part is that the wallet and my commitment to you is that as far as policy comes, we will be very thoughtful and we will share these with you when we get closer to finalizing the policies that are specific to the libra wallet. When you said you were talking about part one, the Libra Association to be differentiated from calibra, you said if its lawful so i think you pointed this out but if its lawful, it should be able to use, you should be able to use libra and not the whims of the ideology of facebook. My concern is that youre going to let hearings like these where you get or you get nailed on national tv and let that inform decisions about how you do business with, similar to Financial Institutions that have that right where you did. We trusted facebook with our data and it failed so im concerned that without the proper protocols in place, people should pause for trusting libra with their financial information. And this opinion is based on countless examples of conservative platform and in general and big. As my senator, as my coming senator Marshall Blackburn said, Companies Need to start embracing the spirit of First Amendment , not just their own employees. So moving on, and in its published material the Libra Association commits the Libra Network transitioning from a permission network to a permission was one, i think that in five years, is that correct . The stated goal congressman is to start that slow transition of fiveyears after the life. Marcus, given this would inspire investors to give up all the interest in revenue generated from this creative reserve, what incentive it with a half to do that. Actually, this is not the way we will work because we believe that the current members who will run nodes on the watching will likely continue to be represented the cause and a transition to permission was you would have delegation of voting and the delegation will likely be done to the members would actually have activity on top of the network so we believe that it will be as dramatic of a shift in governance than what has been portrayed. How can we be insured by this offramp to permission was actually occurs. This is something that we will need to embed in the governance of the association and were currently working on finalizing the charter with other members and its charter in the sample. Notably on aml, and others, theyll be made public. Thank you very much and i know my time. Gentlewoman from new york, miss ocasiocortez is recognized for five minutes. You so much madame chair and im grateful that were having this hearing today, thank you Mister Marcus for coming forward today to testify before our committee. I believe were here today because facebook which is a missing platform, and advertising network, a personal Power Communications network, a surveillance corporation, a content distributor, now also wants to establish currency. And through its wallet as minimum a payment processor why should these activities be consolidated under one corporation. Ponders woman, the one thing that we are focused on really is solving problems for the very people who are left behind right now and we believe its important because we have the ability to invest and we have the products to deliver those services that will solve problems, the same way we reduce cause for people to communicate on our messaging at. Libra is according to your white paper a unit of currency backed by over circular by the we brought association, twoeconomists, members of congress , the term has a very specific meaning. Usually incorporating Monetary Policy. Yet the libra white paper does not define radical states that we probably will be asked by government currency and Government Security so what does that mean in this, your set. It means that if will have the reserve, one for one for every unit of libra you will have the corresponding value in stablecurrency. So does this mean you know, as stated the Libra Association would not set Monetary Policy but respond to demand from sellers. As it appears today there are more canadian libra users than us users. Will there be more Canadian Dollars in the libra reserve any potential redemption . No congresswoman, the way the reserve draft will be determined will be stable and it continues to be stable and we will work with working groups to ensure that it has. This governance over the reserve is association, correct . Yes it is. Currently believer association is governed by facebook, huber, ebay, spotted by, Union Square Ventures and a handful of nonprofits as well as other partners. Correct. Were they democratically elected . No congresswoman but we hope we will have the proper Regulatory Oversight because we agree that they should have a proper oversight to ensure. The Founding Members of this evidence over the currency. Membership is open. Based on current criteria. The first 27 other companies that have joined are the companies that have shared that desire to come and build this network and solve problems. So we are discussing a currency controlled and on democratically elected coalition of largely massive corporations. Do you believe currency is a public good . Congresswoman, i believe that sovereign currencies should remain sovereign and we do not want to challenge sovereign currency. We just want to augment their capabilities. What do you believe currency is a public good . Ponders woman, i believe sovereign currencies are sovereign and as a result they should continue. But you believe libra should be a public good . We will work with all the regulators and address all concerns and the regulators will determine ill take that as a no. I should take that as a no. It is not for me to decide congresswoman. Ill take that as a no. You stated yesterday in front of the Senate Committee that you would be open to accepting 100 percent of your pay inlibra. In the history of this country, there is a term for being paid in a corporate control currency, do you know what that term is . I do not congresswoman. Its called script, are you familiar with script . I am not congresswoman. The idea your pay could be controlled by a corporation instead of a sovereign government, you think theres any risk here question mark you seen from scripts to the issues with how facebook handles our collections are seen as disabling destabilizing in our public good. By facilitating instantaneous purchases, through a digital wallet, calibra and libra, how could my time has expired, thank you very much. The gentleman from tennessee mister trans 12 is registered for five minutes. You been held for two days and questioning both on the senate side, now for our committee and as i sat you today, i heard a number of comments, certainly those who appreciate the innovation that facebook is trying to apply and those that dont want to stifle innovation, but certainly concerns from both sides of the aisle. And as i listen to the questions being asked today, your response is the graphics that have been shown periodically through the day of president trumps tweets about what facebook and libra are trying to do and accomplish and his concerns, just a few minutes before this hearing i did a local radio interview in my part of west tennessee and the radio host express very general concern about facebook and libra. It all boils down to this. How do you propose educating and talking to my constituents about the need for what youre trying to do. And how it will benefit them. How do you explain it to them where they are not concerned and theyre not scared mark. Thank you congressman. The way that were going to make sure that there is proper education in the calibra wallet is it will be designed with education in the product experience itself. So at every step of the way, consumers will understand what theyre doing and what libra can do for them. I do believe that it will help many people reduce costs , notably for sending money around the world. And we will be very clear in education on the association side, we will continue to have social Impact Partners that are focused on mental literacy because all around the world its important to improve on Financial Literacy to improve on Financial Inclusion itself. And as a result, we i believe a believer association will continue funding programs and let experts help. On that front. You understand why consumers are, my standpoint constituents are concerned and even maybe a little scared of your technology and what youre trying to do . Con men, absolutely and this is why when we need to do this the right way and thats being my commitment and is my commitment, you will need the fund to get this right including on education and communication to consumers. Mister marcus, a number of questions have been asked. Mostly recently by congressman oppenheimer about the decision to locate it in switzerland. I assumed you heard those concerns yesterday and i assume you heard those concerns or some period of time. Im not saying directly, why not dislocated in the United States mark. Congressman, i want to say switzerland has nothing to do about evading our responsibility for oversight but we do want the libra Digital Currency to be accepted and recognized as a global unit of measure on the internet and as aresult , placing it, holding the association in switzerland was the right choice because it is the home of Many International recognized organizations. That being said, i believe that the vast majority of corporations,companies , startups that will benefit from a developing building of the Libra Network will be here in the United States and will create jobs here in the United States and will of course be subject to all us law and relation. I can appreciate that but isnt it important that as americans, trust what youre trying to do and when they more likely trusted if it were located in the United States and in some way lightly regulated . By american authorities . It probably would, congressman although they will have a relationship with American Companies and as a result the trust or not of the different wallets that will operate. That being said, the goal of the libra Digital Currency is also to serve a lot of populationsthat are not in the us and as a result , we felt that the choice of an International Home for the Libra Association was the right decision. You understand why American Consumers would be concerned if not located in the United States and instead located in switzerland. Congressman, i think as far as the consumer here in the us are concerned, their funds if they use an american wallet will be here, and switzerland. Thank you, i go back. The gentleman fromNorth Carolina, and the lady from North Carolina is recognized for five minutes. Thank you for invading the hearing and mother, thank you for coming. Like many of my colleagues, i too have great concern about facebooks entry into the Financial Services industry. And have gained a little more insight that i do have some questions and i want to follow up on miss. [music], miss ocasiocortez and explain howa Company Becomes a member of the association. Can you give me a brief answer . I have several iwant to ask you. Of course, so there are sets of criteria that have been been established and that that are public and a company or organization, meeting these criteria and actually join the association as a member. This is a process that is now being led by the Libra Association. Is the process, is it public yes. And a wealthy individual investment become a member . Know, this woman because the criteria as different buckets so its either a corporation are active in delivering services or companies and the blocking area. Let me move on, so consumers cant either then. Congressman, all consumers will be able to use libra. Thats not what i asked, and anyone become a member of the libraassociation . Know they cannot. So it costs at least what, 10 million to become a member of the association mark. Congressman, this is not cost. Numbers will have to invest in the ecosystem to ensure that it is properly funded. Is not a c congresswoman, then investment in the ecosystem. Let me circle back on Mister Nicholas line of questioning. Why would any of the companies in the association make a major investment like this. In this tool. Congresswoman, i believe in my conversations with all of them they agree with us that the status quo is not working were too many people and that people deserve better. A desert lower costs and they deserve a lower barrier of entry to digital money. And that is why they have joined and then of course, they have their own goals that are business goals because they believe that lower costs. Mclean my time and will move on. As a service, facebook Business Model relies primarily on advertising and marketing platform to make profit 2017, 90 percent of facebooks 40 billion in revenue came from digital ad and use the data. And that is the core Business Model, is that correct . Of facebook company, this woman,yesterday. You expect us to believe youre going to start collecting Financial Data and not share it because you promised not to do that . Yes congresswoman and as well because there will be many other wallets that we will have to compete with that are not active in social media or advertising and as a result we will have any good on those commitments. If anything has been learned from the Cambridge Analytica scandal other data acts have occurred on facebook platform. What if anything had learned. Weve learned a lot. And we have now tighter controls on data that we have tighter controls on keeping data from people using our services based. We have tighter controls on Election Integrity and we have invested greatly in Election Integrity and transparency. I will be sending what the stats are when yousay title control. Can you give me an example . You have 45 seconds. Yes, for instance what happened with Cambridge Analytica, the way the platform was opened back and is not possible anymore on the facebook platform today. Okay, so how much as the facebook invested in the formation of libra , Cambridge Analytica and the investment token that will earn a share of interest. This investment havent happened yet, were in the phase of ratifying the charter with other members of theassociation. And then members can decide how much they want to invest and we will take part in that process every other member. Thankyou, your next. The gentleman from ohio to gonzales is recognized for five minutes. And Mister Marcus for being here. Im going to jump right in. So i what todays discussion of is about trust and whether you we can trust your company and i think youre pretty low on the trust currently for very good reason. But essentially, what were talking about on the association side is the governing body of libra, correct . And all the members today how many did you can select . How many recruits, how many did facebook recruits. We approach a wide range of companies. Hundred percent of them . Met the criteria and have thewillingness to participate when we get to the hundred. It would not be in the process, we will not be involved in the decision of who gets to join. Today, you recruited all members . Weve approached a number of companies. I think the answer is yes so well keep going. You created the coding language, most decisionstoday have been made by your company. The claim has been that you will not have undue influence over the platform. Were all politicians in this room, i think if we hand select our voters we be comfortable about our ability to influence whatever decisions are made so i would suggest thats not an accurate claim area actually theres something glaringly missing from the group which are everyday users. Why would you exclude users from having boating authority over the association . Congressman, first i do want to correct one fact which is yes, weve created and invested in all of the code up to this point but now it is in the open Source Community and available to contribute and on the consumers question, its because we believe that to me are regulatory requirements across the association, we need entities that are established, that know how to operate those types of programs, that are trusted, but this is also why we believe that over time it is important to have a transition to giving people more of a voice in we will talk about that in a second. On themembership side you have to be able to validate a 10 million investment. Put a Chinese State owned enterprises in . Could a Chinese State owned enterprise get into the membership . This is not my decision, thats a Libra Association decision but theres a key principle which is if libra is not accepted in a certain country or cant be used, i believe that company should be part of the that so that answer is maybe. Now i want to talk about how you transition. I wonder how you actually do this because the promise of a permission list system without centralization, it seems like if youre decentralized you wouldnt need the Libra Association so help me square those, those seem to be in conflict. Your right congressman to raise this important point and the way that were thinking about this is that since libra will alwayshave to have a reserve , that it will be back to one, there will be some form of centralization and the management of the reserve because you will need the right oversight to make sure that it is managed appropriately to maintain stability and as a result, we believe that there will still be an association that will not only look after the key principles, to operate the Network Within the bounds of regulation and ensuring that proper programs are around but that doesnt mean that the governance theyre devoting have to be the same today so i think we can achieve the balance of having more openness and to me the key issue of a provision less network is the ability to have notes to be more fungible and as a result share the integrity of the network. I actually think this is the hardest thing for you. I dont think it will occur frankly if i had to predict, i dont think it will occur because they are fundamentally in conflict when you talk crypto currency, blockchain, these things dont match so i dont think it will happen. What were most likely to see is 100 Member Organization that you guys basically control which frankly i love the innovation but that scares meif im being honest. And then the last point on calibra specifically, quick question, its the only wallet that will be directly integrated to facebook . Congressman, it will be interoperable with others. Calibra while it will be integrated in what happened and messenger along with other wallets for traditional as a fully controlled subsidiary of facebook the argument that you will be sharing data , i imagine you share data between facebook, instagram and messenger. Id be shocked if youre not also sharing data at some point with calibra and facebook. I just your you promise will do this, thats what i said at the beginning but nobody trust you right now. Im sorry, i feel that. The gentleman from pennsylvania miss dean is recognized for five minutes. Thank you madam chair. Thank you for being here before us. And what id like to do is with the focus on that notion of trust number one, say that i was dismayed by your comments you said we dont need to trust you, i think this wasbefore the senate. You dont need to trust facebook because there are 28 other partners in the association. We do need to trust you. We absolutely need to trust you. So before we look forward to the possibility of libra lightly look back and take a look at the record 5 billion recommended fight against facebook. The gop could you be very specific as to the wrongdoing that generated a 5 billion recommended fine . Congresswoman, first i do agree absolutely that trust is essential and facebook should be trusted. What i meant is in mycomments is even if you dont , you wont need to because facebook will not have outside power or governance over the network. I wonder if you would answer the other piece of my question which was its tough to trust when the collection storage and misuse of information of your users generated a 5 billion recommended fine. Can you be specific . What has facebook learned, what is the specific wrongdoing for which you are being fined. I cant comment on the ftc investigation because it is not yet public but what i can tell you is what we learned. And what we learned is that we cannot launch services and then figure out how it can or cannot be misused. We have to take steps in order to ensure that what we watch is actually you cant be more specific than that . When the thing that youre putting before us today, a preformed association is the same idea what you just talked about . Putting something forward without testing it all first . Congresswoman, nothing is launched and nothing will launch until our concerns. Facebook had to learn some lessons, lessons that you could say in open testimony to the public as to the wrongdoing and the misuse of information. Please, assure us that facebook has the ability to say so now. Yes congresswoman, we have made mistakes. It is true. What are those mistakes so that we can learn andensure you have learned. We have made mistakes around how to best reject consumer data and privacy. We have been working on Getting Better i believe. Did you share consumer data on unauthorized ways . Were a number of issues and we made. So the answer is yes, thank you. The answer is yes in connection with that, consider this. The fccs investigation was sent off by New York Times observer oflondon , a report whichuncovered that facebook , the social Network AllowedCambridge Analytica, a British Consulting Firm to the Trump Campaign to harvest personal information to its users. You find that incredibly troubling . Yes congresswoman but those things are not possible anymore under facebook. They were possible and they took place. We reacted too slowly. You allow the harvesting of information for the Trump Campaign, is thatcorrect . I dont have the details. Its apparent reporting shows up. I think before you move on to libra you want to clean upthe messes of the past and be very transparent , the opaqueness is not working. Lets talk about this, this is structured as a nonprofit and we know that youre going to take dividends or interest and distribute it out to the association members, is that correct . Yes, this is correct. With that be dividends and income . Or whatever streams of income the association will pay up because it is a nonprofit, it will not generate a profitfor himself. It will be appropriate taxes. And i do want to say that i completely agree with your statements that this process cannot be okay. You have to be in the open and this is exactly why. We shared our friends. You had trouble being transparent about thepast. So i do worry about the future. What is the projected income that will be generated, the interest that will be generated in the first year. Certainly you have some timelines, first year, year, third year. The income youre anticipating facebook to mark. Theyre not optimizing for that. What were optimizing for. I dontwant to talk about optimizing. I want to talk hard facts, numbers that people can dig into because i dont think is simple example you gave of a young woman trying to send 200 and you guys are on a mission to help or send money to her mother in a wartorn country really explains why would you get into this business . Its got to be for profit, where is the profit . We got networking indications for the same woman, now she can communicate with her family for free using our product before those products were available. Time is up. The gentleman from indiana mister hollingsworth is recognized for five minutes. I appreciate you being here and investing time with us and talking about these things. I wondered if you might take a deep breath, take a step back. This is something that you are clearly passionate about and that you clearly believe in. I wonder if you might tell us what northstar is and i know you said many times but i wonder if you might sayit again , why are you so passionate about this. This will entail and how to make a difference area. For that opportunity. Im passionate about this because too many people are left behind. The costs are too high. And the very people are left behind are the people who cant afford to be left behind. So the less you have, the more you pay within our current Financial System and the more you need to depend on digital money and free or very low Cost Services move your money around. The less access you happen so we believe that Fencing Technology and building the ability for people with a simple 40 smartphone and a basic data plan to have access to digital Money Services would be a huge progress for many people who need it the most. Certainly the field of indiana are far from Silicon Valley that is exactly something that they can sympathize with. The feeling is they are on the outside of the Financial System or marginally hanging onto the Financial System without the cost of using the Financial System are very high for them. Thats something that your everyday all the way across the district and its something thats important to this committee over a number of years, its a great outline of work and trying to write the Regulatory Framework, trying to help participants get into the market, enable and empower those hoosiers or americans and those around the world that you mentioned as well if the architecture of this is the a transactional oriented platform, tony how that differs from a crypto currency because this is really a Digital Currency versus a crypto currency. The architecture is very different and i wanted to talk about that for a second. There are two parts that are different. The first one is really a Digital Currency itself that is backed one for one with a very stable reserve, that will confer stability to the Digital Currency. So that when you pay something, you know what the value is your pain and all the stories about crypto currency, gosh, can i pay for my peace with this and i wouldve been a billionaireif it were only that then. Its designed for stability in the system is transaction flow. Correct, this is one and two, the way that technology has been built and block chain has been designed is for scale so that it can meet the demands of the Large Community that we hope to serve one day. But the fundamental difference in architecture again, i will purport to be a Technology Expert is that this is not a permission was them. In the sense that its peertopeer. This will go through a central clearinghouse that says xyz individual owns libra because they are in thisregister. They can access it, but you have to be a permission operation to access it or a permission member to access the database. Is partially my punishment. The block chain, the permissions that open blocking and as a result you dont need to be a member of the two services or products on top of the block chain. ,you dont build services on top of what you can go in and make changes to the letter itself. Have requires permission area. Congress men, there is no central body that decides what can be added to the block chain the way that the consensus algorithm that is used works, is that a transaction is proposed and as long as two thirds of the notes approve of that transaction added to the ledger, it is added to the ledger. Which is different from a peertopeer technology. That is correct because it uses consensus algorithm. What im getting to is this is a different type of asset that looks and feels a lot more like a currency and should be regulated more like a currency, right . As though it is transacting business, where there is a sinful place which we can do a and ill work, we can do other pieces. Very different than a crypto currency and i guess 80 outwardly or in a c way on trying to draw that distinction so individuals understand this is different than a pure peertopeer network has no ability to that by virtue of its design, architecture that you only proposed here, not put in place but proposed as central piece where we can do that very work because the goal of aml is to deny access to Financial Systems by the various actors. We have the ability to do that here we wouldnt otherwise have the ability to do in a cure peertopeer architecture sexual or untrue customer. Thats why we took the permissions approach to start with so that we can have trusted parties run notes to start. And i appreciate how that architecture reflects the norm. Thank you. The gentleman from illinois mister garciais recognized for five minutes. Command chair. I you for being here this morning or this afternoon now Mister Marcus. Following up on some of the previous questions, whats in it for partners not to entrench facebook or their own market powers participating in this coalition that youve assembled . That they are merchants and as a result we will have a Business Opportunity to do so when you think about the Companies Like uber and lyft that will be able to not only reduce costs for accepting payments but also a number of their drivers when they get paid and send money back home and taken have a lower cost for them. Okay, tell benevolent. Let me change gears briefly. The senator has noted in a private conversation hes had with some of the 27 members of the Libra Association. The association includes Companies Like uber mastercard as well as nonprofits like facebook and mercy corps. Facebook has portrayed the Labor Association is a collective and facebook is one of many voices in this but as schatz revealed facebooks voice is more like the godfathers voice in the family. Its true its one of many but you know its also the only voice that matters. Heres what senator schatz said. Members of the consortium actually have lots of questions too similar to the questions that are being offered and they have great reservations about moving forward but they dont want to be left up to xhosa facebooks market power. Facebooks history with partners has added to their caution. The game member maker zynga loss of dramatic revenue after facebook backed away with a close relationship of the company. Facebook strained relationship with many publishers last year when it changed the algorithms to deemphasize news stories. My question is are they are dissipating because they are afraid of facebook and i might as well be friends with facebook no congressmen i want to fully own the fact that we are in a leadership position now but we will not be in that same position at the time Network Launches and the existing 27 other companies in the number of other companies along with the other organizations all around the world that are applying to join the Association Just want to join because they believe that together we can build a better system for people and a better world. I suppose. A quick question what content will facebook harvest when a user transaxle with libra . Would it be just the transaction data . Congressman, yes. On the libra wallets we of course will need to authenticate consumers before they can open an account that there will be no other data than they contractual data that is needed to serve the purpose of the wallet. What other data will facebook monetize apart from the transaction data . Congressman we will not monetize transactional or accounts data nor share it with facebook itself. We have learned that Facebook User previously allowed thirdparty users access to data without facebooks users consent now facebook promises its subsidiary will not share data with facebook. How can we be sure that this policy will not change in the future and what would ensuring this promise that you have made . Congressman its a very fair question and i understand that people have concerns and commitments have been made and there is one thing that will be very different which is that if we fail to earn Peoples Trust and fail to deliver on our commitment then they will not use the calibra wallet. We will have affordability builtin and will have the ability for anyone to use any of the many wallets that will be available. It will all be interoperable and if we dont make good on commitments and earn Peoples Trust by making good on these commitments for very long periods of time we cannot actually wait and we do once calibra, the calibra wallet to be successful and as a result we will have to make good on these commitments. Thank you and i yield back madam chairman. The gentleman from virginia mr. Riggleman is recognized for five minutes. Thank you madam chairman thank you for being here mrs. Mr. Marcus. Wellwisher title i more time as we go forward . My title, im the head of calibra and facebook. Some questions and we are going to get right into it because we have had enough getting going on here so my first question is theres usually an Implementation Plan. Do you have the same Implementation Plan for libran calibra and can we as partners in u. S. Government in the regulatory side of this go forward . Congressman yes. This is my commitment that we will not go forward until we have addressed all concerned and the regulatory and oversight bar that is needed to operate the right way. Are the partners involved another Source Development of libra and its applications . Congressman some of them are stepping up and are actually starting to be involved in the development and i expect since we just open sourced the code days about four weeks ago that we will have a lot of outside contributions going forward. The accesses the backend and it helps with the actual transactions and i know its very new but it looks like theres already an International Flavor to it. Think the rest is 37 people in San Francisco so i did a hub search on whos leading the development on the libra course either looks like i think its going to be international because it looks like a native nigeria and that is actually building the libra core and the development of libra core. I look at things from an intelligence background and i wonder is this going to be, is there going to be scalability issues because i look at the number of transactions you are doing right now but i was surprised by the language in the background to my first question is why was the language chosen as an implementation language for libra and do believe from what you are seeing you believe thats mature enough to handle the issues and the security challenges that will really affect these large Cryptocurrency Transactions . Congressman excellent question on the security of the court and who can commit to the code in the Libra Association will on the repository for the code and as a result while there are many flavors and branches being developed by certain parties only save verified codes will actually be committed to the actual libra core base that is going to be under the governor of the Labor Association. That is what i really am hoping because right now one i was looking at the result releases it looks like libra was built under the rest programming language and its really interesting because thats not how we did releases at the dod and i was wondering what features are rest are only available and its something you can get back to me on, what features are only available on the nightly bill and official releases of rest and theres a concern that they are dependent on the rest program. You see the releases in just a function of the prototyping phase of this. Congressmen i dont have all the answers to your very technical questions but i commit that we will get back to you with more details on your question and whats my Technical Team can get back to you. Really some of this is not just based on technical questions that the International Click ability of libra so for instance we just had eight members of major banks here and there she was information sharing based on laws we are sharing with horns subsidiaries. We have those laws on the books and if we are looking it aml and my background those are things that concern me and also scalability. You are using large transactions and blocks that have never been on the board you can probably agree it needs open white paper and Source Development but looking at the regulatory especially for aml and think the problem is we have to look at this as an act national problem. Eventually youre going to have international wallets. Wallets will be built from around the world and its something we are going towards and thats why the scalability problem who is doing this and who is partnering in this hand its really easy to access these individual son gets hub and someone from the nigeria is the main code writers something that concerns me based on my background. Those are absolutely fair concerns congressmen but i want to stress the Libra Association is the governing body will actually validate the code and we will make sure its very thoughtful about who can commit to the code and id be happy to follow up with you. Many members by partisan mice would love to see an Implementation Plan built on top of the white paper. Thank you sir. The gentlewoman from texas you are recognized or five minutes. Say a thank you madam chairman thank you sir for being here. Know its been a long day and i think the end is almost in sight i must tell you i have some real concerns about your premise that you are really doing this to help the unbanked. For me it seems although you said in your Washington Post article that this will help anyone who has a basic access to a digital form of money. I dont know about you but it costs a lot more than 40 in my data plan costs that are more. How was this really going to work because the unbanked like people in my district in houston really are money order our paycheck to paycheck cash only consumers. How is that i mean how are they going to have access to Something Like this and deal to negotiate what i think will be a very complex system . Congresswoman thank you for your question. The reason in america that people remain on the fringes of the systems is because the costs are too high. The costs of the phones and data plans are also high. Are you going to work with the Facebook Foundation to provide more connectivity for people around those areas that dont have access mobile plants . Congresswoman the focus of calibra is really on the financial side and enabling people to have digital money but the cost of smartphones and data plans are coming down as a result. Why would they need digital money if they can get that why would they want digital money if they can get the green dollars . Congresswoman they would because probably they need to send a portion of that money to someone in another country or on the other side of the country and the ability for them to access this lets go to the example you used, 200 as somebody once then i think you said it would take 14 but i guess you were talking about either money order or some sort of Wire Transfer clerics. A crossborder remittance. You know they can do that fairly quickly and they can do it without any advertisement. They can do it without any other charges so the consumer will decide whats going to happen. With you how do you see the person . Are their customer or a consumer . How will you treat this and are you just frankly using them versus being able to sell another ad and do something for your company . No, we are not congresswoman and i do want to stress that not only the Current System is expensive but its extremely slow. Crossborder payments but i mean in terms of cost. I sit here and i frankly cannot believe that you were not going to charge anybody for anything. Youre not a charity, right . No congresswoman and i can explain. You and are not a charity and how much money they invested in this program . It article i read said youve been in this for couple of years. How much of you all spent already . Congressman quite a bit of resources. How much have you spent . I dont know the exact number. 20 million, 40 million, 100 million . I think its why tell me how much. Youre trying to convince me theres going to be a time that you will want to recoup that investment. Yes will congresswoman. And how well you do that without charging for ads were charging the person that in my view you are using for your agenda to get i dont even know what you call what you all do. Celtic something straight out of a dead and brown novel. We have belong to the libra and we get to decide. Congresswoman if i may answer your question. I want you to be more transparent. I want to be more transparent if you would give me one minute. Youve got 20 seconds. There are two things that we will benefit from. One is we have 90 million Small Businesses and the users will have the ability to transact with one another when they currently cannot transact with one another. Again it has to do with a credit card in there are so many other ways they can do that. I cant for a number of reasons that they dont have access to the service. Hispanic i use a lot of my time but paternal front from tennessee mr. Rose is recognized for five minutes. I want to thank you for holding this important hearing and mr. Marcus if you want to finished the ants were you when the midst of i would appreciate hearing that answer and you might start over actually. I thank you for the opportunity congressman. The two ways we will make money by the Libra Network is number one the ability for the 90 million businesses and the billions of users who are currently on our various products to transact with one another. Some of those businesses cannot accept payments today. The idea that there is more commerce will drive the Small Businesses to expand and has the expand they will buy up more ads on the big platform and that will be an indirect way for facebook to benefits. The segue will benefit over time if we are Peoples Trust and they used the calibra wallet we will offer a range of services at lower cost access to capitol and in partnerships with Financial Institutions in this will be another source of revenue for the company that is completely decorrelated from that but that is in many years. Those are the two ways that facebook will benefit from the Libra Network. Thank you. One of my general thoughts surrounding it comes to simple dichotomy. Eve either the Crypto Organization block changes made will be a valuable innovation in the longterm or it isnt a particularly valuable innovation. If the former is true then it is important that the u. S. Create a certain Regulatory Environment as possible. By creating regulatory certainty the value of the growth in this space can be captured here in the United States whether that be the value in job creation or the creation of intellectual property or other benefits. If the latter is true and this is not a particularly valuable innovation the discussion may not care for it but its ultimately no harm no foul. However the truth of the matter is whatever ones feelings are on the libra project or any other block chain related efforts currently there does not seem to be inadequate regulatory structure to ensure that innovation can flourish while consumers are still protected. That is why i am a cosponsor of the token taxonomy at. There are still many questions to answer but the goal of the top enemy taxonomy block. We as a committee in congress to discuss the nuances of distributive ledgers versus permission versus permission with block chain and utility codes like cryptocurrencies like bitcoin bitcoin. The token taxonomy act is a good first step in that it aims to codify a regime or for tokens that dont fit well into our current Securities Law framework mr. Marcus was it a coincidence that the Libra Association decided to headquartered in switzerland one switzerland has previously outlined clear regulatory guidelines for the industry . Regulatory clarity in switzerland was one of the components but yes it was factored into the decision. Libra strikes me as being very similar to a current cet on both and that its value is derived from a basket of currencies and the way the basket is managed seems to operate much like an atf. This is true perhaps it should be regulated by the fcc. Perhaps this is a mischaracterization. The point is that we need to carefully study the mechanism of innovation in this field to understand how they should be regulated. Existing regulatory agencies like the cftc, the ftc state agencies make sense but it is our job here in congress to write laws that makes it very clear who will regulate or who will be the ultimate regulator of a potential product . It its congresss job to give the a d. C. Clear rules that they can interpret and apply. The fcc is doing its best but they are stuck applying a litany of very old rules to 21st century technology. We need to help by providing some updated guidance. That is the only way we are going to ensure that any development in this space is safe and sound and occurs right here in the most innovative economy in the world and with that i yield back the balance of my time. Thank you. Without objection id like to enter into the record the following materials. A letter from the luck to city, electronic privacy information center, it diversity in black chains initial review of facebooks fraud that libra a letter from americans for financial reform education funds a New York Times oped written by the cofounder facebook entitled its time to break up facebook. Another oped by the Financial Times entitled facebooks cofounder libra coin would shift power into the wrong hands with that id like to recognize myself for five minutes. Thank you mr. Markets for joining us. A lot of people up and using the word innovation and that is a bit misleading. I think what this is really about is making more money, owning peoples information owning their identification and their personage for all of which very much is interconnected with the likelihood of the residents we represent. Mr. Marcus how are who takes the first 28 corporations of the Libra Association . Congresswoman the original 28 members are your result of a wide outreach and those are the first out of 100. Facebook will not get a position to pick and choose members and will not be involved in the process. This is a process that is solely in the hands of the Libra Association. Thank you mr. Marcus. Mark zuckerberg ceo of facebook sits on the board of writer industries and peter teal is the founder of paypal and is on the board of facebook. Ben horowitz is the founder of Anderson Horowitz and omnivore of lyft. Simply looking at the small sample of individuals there appears to be multiple Close Relationships on facebooks board and across the Libra Association members. Recently forbes asked the following question come is facebook forming a crypto mafia as Libra Foundation members boost other businesses. Im sorry this is distracting. One example they provided is anchorage or one of Labor Associations Founding Members raise funding who is Labor Associations Founding Member. You dont think that creates a power imbalance for a small group of people to manage a High Percentage of the worlds transaction specs are you worried about undue influence . Congresswoman i appreciate your question. I can assure you that the participants up to this point are participants that have joined because they can add value on the network and provide services that are relevant to the people we serve. Im sure there is value mr. Marcus. No one would oppose that they are valuable but each of the libra companies have investors and Share Holders so how do you see them serving two masters and the competing payments world . Congresswoman we hope that the Libra Network is just a network and that every Single Company will be able to build services on the networks the same way the companies build services on top of the internet and as a result we believe conflicts will be limited by that and the fact that 100 members by the time we launched but we hope we will have many more and again. And a member of the Libra Association of a group of friends be voted out by libra users . Congresswoman, no. This is not currently contemplated by the way that governments will evolve will allow for that in the future. Mr. Marcus and this is important, the banks and the Founding Members have protection data but will the unbanked and underbanked have to trade there data and privacy . They will not congresswoman. How is that possible . Because this is a Payment Network and the Payment Service congresswoman and consumers will have choices and if they want to use a wallet that is solely in the business of payment and not in the business of advertising at all they will have a choice. One of the barriers for the unbanked community as a prop we know his access and i. D. So it the same know your customer antilaundering junctures exist here for the Libra Network and wallet how will this serve the unbanked now . Congresswoman is a very important question. A problem i did identification for Financial Inclusion in this is something that we are actively working on with a number of outside ngos and others to find the best approach but there are a number of people who have the ability to identify themselves and to our left behind today and we can serve them today. The public manages large cryptocurrency such as bitcoin as you probably heard however with leverage Founding Member has to pay a minimum 10 million to join and become a validator for nonoperator thus each Founding Member gaining each vote in the counsel. How does Libra Association reflect the diverse population you are trying to include including the unbanked and the underbanked . This is important question congressman the way we plan to arrive to the right level of diversity and representation is by being very thoughtful of the Libra Association as we have more members towards the goal of 100 or more members by the time the Network Launches. Thank you mr. Marcus and id like to recognize the gentleman from wisconsin for five minutes. Thank you. I appreciate being here but ive been listening to todays testimony and i appreciate you guys innovating bringing forward a white paper, having this discussion about how to properly regulate what is a new idea. Some of the conversation today has drifted a bit more people are coming after it is if you launch this product and now we are upset that you did that without the Regulatory Framework in place. I commend you for the fact that you brought forward a white paper. You are discussing the idea or having the conversation today so we could be ready tomorrow if you choose to move forward with this. In particular in listening to the discussion today i think its clear that libra is characteristic of many Different Things for which we have a regulatory construct for. We have discussed should libra be viewed as a currency or security a Money Market Fund etc. And whatever concrete institutional kamili emerges from this first draft of the white paper and you have stated you dont dispute the fact that at some level its going to be regulated and you are open to that. You also signaled that there is hard deficiency and in the u. S. Regulatory approach and that was part of the decisionmaking process to locate the Libra Association in switzerland and not in the United States or Silicon Valley and under more clear u. S. Jurisdiction. For me if america doesnt lead in the digital world, others will. Im concerned about the values of some of these others i might bring to the table where i feel confident of values that the regulatory approach will bring. Can i ask you a question, how and not it because i think we have answered that because it should be regulated but how should we regulate libra to libra to Libra Association to be thoughtful about this in the context of policymakers . Congressman thank you for the question. There is one important point which is that the clarity of regulation is certainly one of the fact years and one out of many. I do think he would have the ability from a Regulatory Framework in the United States but it is less clear to your point with the framework. That being said as far as the libra while it is concerned we are registered as the Money Service business with the treasury. We have state licenses that we are obtaining and continuing to tame so theres total clarity there and i believe that where we need more clarity is really around the Libra Association and how the reserve is managed and even from that point there is just no clear regulation right now even in switzerland or elsewhere and this is why the engagement that we are having with the working group the board and the others the conversation we are having we hope will result in some form of oversight especially over the reserve because this is something that a lot of people have concerns about and i have concerns about ensuring that the commitments are bound by the law when it comes to the reserve and that is the commitment we are making that we will take the time to find at night or she then in the reason im taking another regulatory approach from a policymaker perspective that i have the most influence on as the Regulatory Framework that we have noted a couple of times in your testimony that you dont look to be regulated as a security by the fcc. Can i ask is there anything specific as it relates to our Securities Laws that concern you if you fell into the regulation of the fcc regulation that we should be looking at today to prepare for tomorrow . Congressman i dont believe we are a security because not whether or not you are but removed that because that will be debated for days and months to come but is there anything in the Securities Law that gives you plot is that makes you not want to fall under the tax . Certainly because as far sleep was concerned that the payment tool and we wanted to be accessible to everyone. If it wasnt available to everyone than we wouldnt be able to deliver on it. That notice help old but the Securities Law limits peoples taxes into some the investment credits we have the United States and has a Significant Impact into the product you are looking to deliver. I want to shift gears slightly. One of the areas in the commentary i think there may be a real role in countries with unstable currencies and as you look at the global perspective shifting away from United States for a moment i appreciate your time today and i will followup on the topic and i yield back. The gentleman from massachusetts mr. Lynch is recognized for five minutes. Thank you. Excuse me. Im not trying to get in the way of your job but i do want to say and i know the gentleman from wisconsin is new but i would respectfully remind him that thats exactly what facebook did when they came in without with a Regulatory Framework without even a white paper or thats how they operate. The mantra of move fast and break things. That was their mantra when they got into the business. They also would the gentleman yield for a moment . No, i would add that they also have taken an approach to business that rather than ask permission they just apologize later and thats what they have done over and over again with the personal data of their customers. Their Business Model and thank you for coming, is to really use an adhesion contract 18 pages that basically authorizes facebook to vacuum up the behavioral surplus. All of the information about their users and then they sell it or they deployed on behalf of their advertising. Thats the model that you have. Im just worried that you are going to use the same model for calibra. What are the terms of Service Agreements going to look like here . It is it going to be quick and i agree in all your rights are gone because thats the model you have a facebook, right . Congressman if you give me the opportunity. Really quick. We only have so much time here. I want to defend the Business Model to face with. Im asking about culebra. What are the terms of Service Agreements going to look like lexus is another teaching contract . Know congressman will not share data even with facebook itself congressman. Okay, you havent had a good record on that. Let me ask you a couple of questions. So according propublica you have about 52,000 data points on every one of your regular users on this book. Is that right . I dont have the exact answer to that. I think they are right. We feel the ability of this to scale is really dangerous. You have 2. 7 billion customers and if the scales and is designed to scale, right . It that we are worried and not just us in congress but powell over the fed and secretary mnuchin, they are concerned the impact it would have on Monetary Policy and the strength of the dollar. Is this something that could be tested in a sandbox environment and a smaller environment where we dont have to worry about those scaling problems affecting the economy more broadly or the strength of the u. S. Dollar. Congressman the first i would like to make would you commit to doing this in a sandbox environment where we dont have to worry about the regulatory issues and the privacy issues and we would have a chance to look at your product. This is a product. You have a token here. That way would be able to enter some of the regulatory questions. Are you willing to commit to that . Congressman i commit that we will take the time to address all concerns and to ensure that we do this the right way. In a sandbox environment. Congressman i dont want to get into that. Thats where im asking you. My commitment to you is we will take the time and we will not move back on this. The command that you are going to take the time first of all is not the way youve operated in the past and its meaningless, its meaningless. If i tell you im going to take my time what is that . Thats an indication of pace. As many were going to do anything differently than we want it to do. It looks to me like right from day one you are going to be a systemically Important Financial Institution and so you should be ready for that regulation coming at you on day one way or operating right now with a lack of transparency. Let me ask you, facebook has determined privacy very well. Would you cut met except king fiduciary duty on behalf of the private the gentlemans time has expired. Thank you. I think the chair. The gentleman from minnesota mr. Emmer is recognized for five minutes. Thank you madam chair. Mr. Marcus ive heard incredibly uninformed comments by members of Congress Today and yesterday. As im sure you are aware this is now 10 years old and now suddenly magically congress at is responding. In other words after more than a Decade Congress has apparently started to care. Im glad after all these years that congress has finally decided to Pay Attention to the technology that could begin just like the internet up and the way we do everything in our lives. Unfortunately some people want to unnecessarily restrict it or even ban it. They fear change. Nothing has been more clear on this committee and the blind aversion to change to some of our members have constantly espoused even when it wasnt required or even the subject of the hearing. Im amazed at how easily representatives from california are so willing to suppress the innovation occurring in their own state but as much as they would like to be a separate country that benefits those innovations that have for these United States. I dont want to be partisan. This is not a partisan Tech Knowledge he did in fact representative bill foster cochair of the caucus like myself its been a long time champion and advocate for these innovations. It has never been a cornerstone of my grandfathers Democrat Party to oppose innovation that chairwoman waters was correct when she began this hearing that learning more about and understanding libra does not have to include opposing it. I hope that will be the same approach to understanding the breadth and depth of cryptocurrency which libra does not represent but thankfully amplifies our discussion of that topic. Fortunately mr. Marcus you and your company have decided to approach this undertaking with the sequel a level of ignorance and misunderstanding as those who wish to quell any new developments in cryptocurrency. Im afraid you have failed to realize there is much to do in washington in terms of educating both members of congress and regulators on the benefits of this technology. I hope someone whose opinion you value can base to you how long youve been operating. People have concerns with the amount of data you have on that and now you want to be their money to but i hope members of this committee investigate the fact that quote the people are to have options separate from your central control. My colleagues are incredibly fearful of the Money Laundering and criminal act to be a cryptocurrencies but the dollar in currencys have proven to be the largest means of illicit behavior and Money Laundering. This is not mean we need to suppress individual freedom. Individuals can system on the conclusion of momentum the freedom of the individual create open networks separate from central control. Unfortunately libra is not designed to minimize middlemen. It in fact relies on them. At the end of this day labor presents an Incredible Opportunity to define what it is not. It presents an Incredible Opportunity for everyone on this committee to learn more about actual cryptocurrencies. The committee has sent out a press release that this is only her first up and regulation of oversight of libra. A lot has been said about the concern that the Payment Systems are unregulated however Payment Systems like the one you have proposed is already subject to regulation by a number of agencies. They could support my colleagues have a full understanding of the law as it currently exists so we may make better decisions here. Treasury has demonstrated by secretary mnuchin on monday regulates Payment Systems for antimoneylaundering compliance. The ftc regulates them for fraud each state regulates them for Consumer Protection among other things. New york has its own specific regime and so forth. This regulatory landscape applies to Payment Systems likely brain is different and distinct from laws that may or may not apply to social media platforms for this hearing was announced that with optimistic that this was finally the time a Major Company wanted to be involved with this revolution and of the majority wanted to think and learn about these new innovations. It appears they decided to entrench themselves in the fear the unknown and fear change in your company has done nothing to ill light the spheres but as you move forward your action has no constitutional basis let alone a basis in logic and no one is able to put their name on this proposal to ban private innovation will you work with me to show these members of congress that we should work to better understand the annotations of the underlying cryptocurrency rather than doing their best to put their heads in the sand and ignore change . The time of the gentleman has expired. Chairman green is recognized for five minutes. Madam chairman. Mr. Marcus, i am concerned about the dollar. As you know as a competition or currency supremacy the dollar is the preferred currency of the world. The yen competes, theyearold competes and there are others. The question i have for you is this. How will this impact the dollar . This is our currency. The dollar is the means by which we have the opportunity to influence the economic order in the world. How will this impact the dollar . Congressman the first thing that i want to say is that we are not competing or we do not want to compete with the dollar. The question is not whether you want to compete with the dollar. The question is what impact will you have on the dollar . The dollar is supreme. Do we give up our supremacy because of a cryptocurrency . No congressman and we are engaged in conversations notably with the fed and the Financial Stability board to explore how we can ensure that the dollar in Monetary Policy is not influenced at all. Things tend to metamorphose. Things rarely remain stagnant. We live in a. Diana world. Its just a small piece of the economy as it were. We dont know what this will become. Surely you can understand the consternation of people who are charged with the responsibility of overseeing the fed which happens to be the means by which we have influenced with our economy and the dollar. So we have this consternation and i would greatly appreciate if you could allay some of my consternation with reference to the impact this may have on the dollar. Congressman the reserve will be composed mainly in dollars and we expect excuse me and sorry to be rude but my time is limited. Use it mainly of the dollar. You said earlier when tested for time in this room questions posed by another member that another country could also enter the reserve. I believe china may have been mentioned. Is it true that china can buy into this reserve . No, congressman. The reserve is to be approximately 50 dollars and a number of other currencies, theyearold, pound and the yen notably. I indicated to you earlier that we are in competition with theyearold again is the japanese currency. We would compete there so you have these other currencies and you have the dollar but the question becomes how is this going to be balanced so that it doesnt impact the marketplace itself for currency . Congressman i believe the case for libra such that it will be used mainly outside of the United States although it has Real Solutions to real problems in the u. S. As well and as a result of the competition of the reserve with believe the inflow 2 will be important and as a result retain the relevance of course of the dollar. 8 a currency that is preeminent of that of the United States so saying to me that this is something that will impact things beyond our borders does not give me a level of comfort i need when my concern is with the dollar which seems to transcend boundaries. In a place in that you happen to visit the dollar is available to you. There are countries that preferred the dollar to their own currency but im still asking for more and if you will send me something i will be more than honored to peru as it in i yield back the balance of my time. The gentleman from texas mr. Gooding is recognized for five minutes. Thank you madam chairman thank you for being here today. Mark zuckerberg came in front of congress in april of 2018 and facebook established its block chaining in 2018 per does that sound accurate . Yes we started it in may of 2018. Usurp an abortive direct or is for coin base which is a Digital Currency exchange from december 2017 tips august the 2018. His accurate is that accurate . So you understand how this works and how the exchanges of Bitcoin Blockchain etc. Etc. Many of these that were not proficient on you are proficient. Going down that line you would also say you know how profitable thisan