Senators questioned Facebook’s plans to launch a new virtual currency on Tuesday while noting the company’s past privacy breaches, including its release of consumer data during the 2016 presidential race.
Sen. Jon Tester and other members of the Senate Banking Committee quizzed David Marcus, the Facebook executive leading the project, on how the company plans to prevent fraud, money laundering and terrorism financing as it introduces the new global currency next year.
“Facebook hasn’t been meritorious – and I’m being generous,” Tester said during Tuesday’s committee hearing. “The past performance of Facebook has not been aggressive enough. And it has had some pretty negative impacts on some stuff worldwide.”
Facebook claims that its digital currency, known as Libra, will allow people to send money online cheaper and faster while opening access to financial services. The currency would be managed through a “digital wallet” dubbed Calibra.
But members of the committee focused their concerns on the risks, such as bad actors abusing the system. Money laundering, financing terrorism and potential threats to data privacy also remain concerns, Tester said.
“I have a number of concerns, one of them being consumer security,” Tester said. “How are you going to prevent bad actors from using the application?”
Marcus said Facebook plans to take number of steps to mitigate the concerns raised by members of the Congress. The system will be backed one-for-one, he said, to ensure that it’s stable and retains its value, preventing a feared run that led to the collapse of several big banks during the 2008 financial crisis.
Marcus said the company will also build security into the system.
“When anyone will open an account, you will have to authenticate and upload your government issued ID,” Marcus said in response to Tester’s questions. “We’ll have real identity on top of the Calibra Wallet, and we’ll have systems and a dedicated team to prevent fraudulent activity and, of course, to meet our requirements of anti-money laundering and counter-terrorism funding monitoring.”
Other members of the committee weren’t assured, saying “the core issue here is trust.” Facebook’s past performance when protecting user privacy and data has tarnished its reputation in the eyes of some lawmakers.
“To earn people’s trust, we will have the highest standards for privacy,” Marcus said. “The way we’ve built this is to separate social from financial data.”