6 Key Takeaways from Facebook's Testimony on Libra

You missed Mark Zuckerberg’s testimony on Libra in front of the Financial Services Committee of the U.S. House of Representatives on October 23, 2019?

Here are the 6 key takeaways:

1. Regulators’ support is essential

Facebook will not be a part of launching the Libra payments system anywhere in the world unless all U.S. regulators approve it. And Facebook supports Libra delaying its launch until it has fully addressed U.S. regulatory concerns.

2. Facebook will not be leading the Libra efforts going forward

Facebook is proud to have helped found a 21-member coalition that have now committed to moving forward with Libra. But Facebook does not expect to be leading those efforts going forward. The Libra Association has been created, has a governance structure in place, and will be driving the project from now on.

3. AML/CTF/Sanctions monitoring will be an integral part of Calibra

Payments processed through Facebook’s licensed payments subsidiaries are subject to comprehensive anti-money laundering, counter terrorist financing, and sanctions monitoring that leverage both Facebook’s automated systems and human review. Facebook is committed to building similarly robust compliance systems for the Calibra app. 

Facebook also believes that Libra can help in the fight against money laundering and financial crime. A lot of illicit activities are funded through cash. Facebook believes that a digital payments system with regulated on- and off-ramps and proper KYC practices is easier to secure, and law enforcement and regulators can conduct their own analysis of on-chain activity.

4. Facebook will not access financial data

Facebook set up Calibra as a regulated subsidiary, so that there is clear separation between Facebook’s social data and Calibra’s financial data. Calibra will not share customers’ account information or financial data with Facebook, except to prevent fraud or criminal activity, when people affirmatively choose to share their data, or when they are legally obligated to do so.

5. Libra is not meant to replace sovereign currencies

Facebook made it clear that Libra is not an attempt to create a sovereign currency. Like existing online payment systems, it’s a way for people to transfer money. Zuckerberg made it clear that monetary policy is the province of central banks, not Libra. The Libra Association has no intention of competing with any sovereign currencies or entering the monetary policy arena. It will work with the Federal Reserve and other central banks responsible for monetary policy to make sure that is the case and Facebook expects that the regulatory framework for the Libra Association will ensure that the Association cannot interfere with monetary policy. 

6. Financial inclusion remains a priority

Zuckerberg made it clear that Libra project is about promoting financial inclusion through a safe, low-cost, and efficient way of sending and receiving payments around the world. Research shows that access to financial services can help people lift themselves out of poverty, and it is especially important for women in developing economies. Facebook believes this is a problem that can be solved, and wants to be part of that solution.

Mark Zuckerberg's written testimony is available here and you can watch a video of the entire testimony here.

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Henri Arslanian, can be reached at [email protected]

*Please note that this summary is based on Mark Zuckerberg’s written testimony and many passages have been copied verbatim to ensure accuracy. Please also note that this article reflects the author’s personal views.