In response to multiple questions on the matter during an hours-long grilling session on Capitol Hill, Zuckerberg said Facebook would be “forced to leave” the governance organization overseeing Libra if the group moves ahead with launching the digital currency without US policymaker approval.
“If at the end of the day we don’t receive the clearances,” Zuckerberg said, “we will not be a part of the association.”
The acknowledgment could have major implications for Zuckerberg and Facebook. The company is betting that introducing Libra can help Facebook users transact with businesses directly, which in turn could “lead to higher prices for ads” on the platform, Zuckerberg said Wednesday. “We may see a positive business impact,” he said.
Zuckerberg returned to Capitol Hill to testify before the House Financial Services Committee over Facebook’s plans for Libra. Within minutes, however, it became clear lawmakers would expand the focus of the hearing to include a wide range of concerns about Facebook.
“You’re willing to step on anyone — your competitors, women and people of color, even our democracy,” Waters said in her opening remarks.
Zuckerberg attempted to defend Libra as necessary innovation for the financial services industry while acknowledging the concerns about Facebook in particular launching the effort.
“I believe that this is something that needs to get built, but I get that I’m not the ideal messenger for this right now,” Zuckerberg said. “We’ve faced a lot of issues over the past few years. I’m sure there are a lot of people who wish it was anyone but Facebook who proposed this.”
At other points, however, legislators echoed Zuckerberg’s arguments about the importance of fostering innovation in the US, applauded the Facebook CEO for declaring himself a “capitalist” and even compared him to President Donald Trump. “You’re both very successful businessmen, you’re both capitalists,” Rep. Barry Loudermilk, a Republican on the committee, said in the hearing. “You’ve done very well, but I think really what you share in common is you both challenge the status quo. He calls it ‘draining the swamp;’ you see it as innovation.”
“People pay far too high a cost — and have to wait far too long — to send money home to their families abroad. The current system is failing them,” Zuckerberg said in his prepared remarks.
In his prepared remarks, Zuckerberg also attempted to defuse fears about Libra’s potential impact on existing currencies. Zuckerberg said Libra “is not an attempt to create a sovereign currency.” He also noted that Libra will be backed “mostly by dollars,” referencing the Libra Reserve that will back the coin 1:1.
The anticipated makeup of the reserve, beyond Facebook’s statements that it will be comprised of government-backed currencies and debt instruments, has been unclear, leading lawmakers to fear Libra could undermine central banks’ ability to carry out monetary policy.
Zuckerberg’s lengthy testimony may still not have been enough to address the many questions lawmakers have about Libra. Near the end of the hearing, which lasted more than six hours, the committee’s ranking member Rep. Patrick McHenry said he is not sure the committee members had “learned anything new here.”