House lawmakers ask Facebook to put Libra cryptocurrency project on hold

https://www.theverge.com/2019/7/2/20680230/facebook-libra-calibra-crypto-maxine-waters-congress-regulation-investigation-halt

by smacktoward • 7 years ago

143 77 7 years ago

theverge.com

jbverschoor• 7 years ago

“These vulnerabilities could be exploited and obscured by bad actors, as other cryptocurrencies, exchanges, and wallets have been in the past.”

Says one bad actor to the other bad actor.

colonelpopcorn• 7 years ago

I really want to see what happens if Facebook says no.

dmoy• 7 years ago

It would not go well for Facebook. Their lawyers won't let them say no.

mythrwy• 7 years ago

Maybe Facebook doesn't say "no".

Maybe Facebook says "How about if we share all the data with your agents real time through an API."?

BTW Maxine, isn't your re-election coming up? We really like what you are doing in Washington here's a check for some signs.

(or something along these lines)

malandrew2• 7 years ago

It's not a law, it's a request. You just acquiesce without making any concrete commitments and carry on as if the request was never made.

archy_• 7 years ago

Years of market manipulation is fine as long as you're a federal agency with the backing of major banks. It's like the US complaining about Russia proxy wars and election interference - who do you think they learned those techniques from?

higginsc• 7 years ago

“Because Facebook is already in the hands of over a quarter of the world’s population, it is imperative that Facebook and its partners immediately cease implementation plans until regulators and Congress have an opportunity to examine these risks and take action,” the letter says.

We're scared that you have the ability to disintermediate our control of the financial system just like you did to publishers.

maxaf• 7 years ago

Forced to choose between Facebook and a government controlling anything, I'd rather have the government at the wheel. For me this is a "devil I know" type of thing.

smacktoward• 7 years ago

With government, you also get periodic opportunities to vote on whether or not it should change course. It's hard to change a government's direction with the ballot box, of course, but it's not impossible.

Contrast this to Facebook, which is structured specifically to prevent even large shareholders from having a say in its operations. Facebook is the Empire of Zuck, and the only factor that matters in its decisionmaking are the whims of its boy king.

ksdale2• 7 years ago

I’m probably reading too much into your comment, but there’s a big difference between “a” government and “the” government depending on where you live. I don’t trust Facebook at all, but I trust them more than I trust certain governments around the world. At least they don’t have a military. Sometimes assholes without guns are better to have in charge than anyone with guns.

Sargos• 7 years ago

Thankfully there's a third option of society itself controlling everything. This post is talking about whether government or Facebook controlling money but the third decentralized option of cryptocurrency is far more appealing to me.

malandrew2• 7 years ago

Facebook does not have a licit right to first use of force. I'll take it any day over government.

bilbo0s• 7 years ago

Pretty much.

That said, anyone in a position of power generally acts to defend their own power. It's not like we should not have expected this from the government. Bitcoin, Ethereum, whatever type kooks are one thing. Grandma and her book club are never going to use that stuff to buy pies at the church's bake sell. Facebook offering Libra or, God forbid, Walmart offering "Wally Bucks", is an entirely different matter.

6gvONxR4sf7o3• 7 years ago

After 2008, that's a very reasonable worry. I'm happy for the government to prevent behavior that can cause that much harm.

crazygringo• 7 years ago

This gets it all wrong, IMHO.

An "official ask" rather than actual laws or regulations comes across as silly, self-serving and grandstanding -- although it is in Facebook's self-interest to work with Congress.

The problem here is the potential for uncompetitive dominance -- just like Google or Apple can unfairly favor their own products in Search or apps, what does it mean for Facebook to favor or only allow its own currency option in transactions/marketplace/etc.?

Far better would be Congress ensuring freedom of choice -- let Facebook develop its own currency, but make sure that anywhere it's provided as an option on Facebook/Instagram/etc. there's also an equivalently frictionless way to use Apple Pay, Google Pay, PayPal, MasterCard, etc.

Force payment methods and currencies to compete on a level playing field, instead of by which mega-company forces them as exclusive options.

ptah• 7 years ago

I think they are asking them to delay development so they can do proper investigation into possible effects before regulating

MuffinFlavored• 7 years ago

How will Libra cut into the US credit card processing margins? Stripe will charge small customers 2.9% + $0.30 per transaction, and I'm sure large customers get as low as 0.9%.

Does Libra stand to cannibalize that margin/business model over night?

whateveracct• 7 years ago

An "official ask" rather than actual laws or regulations comes across as silly, self-serving and grandstanding

Libra was announced extremely recently. Do you really expect lawmakers to push laws or regulations through the system that fast? Surely not.

If anything, an "official ask" like this is one of Congress' many tools.

dsfyu404ed• 7 years ago

Do you really expect lawmakers to push laws or regulations through the system that fast? Surely not.

The GP's expectation aside, I don't want the government to be able to make laws that quickly. Knee jerk laws rarely work well.

mcoliver• 7 years ago

Link to the Full text and release here: https://financialservices.house.gov/news/documentsingle.aspx...

PDF: https://financialservices.house.gov/uploadedfiles/07.02.2019...

seibelj• 7 years ago

Official Facebook summary of the past two weeks, responding to many criticisms: https://www.facebook.com/notes/david-marcus/libra-2-weeks-in...

paulgb• 7 years ago

Most amusing to me is the question "Can Facebook be trusted to manage financial services?" to which Facebook's own answer is not an emphatic "yes", but an explanation that they will not control it.

Zenbit_UX• 7 years ago

I don't see how the only reasonable response to such a stupid question amuses you. If they had responded with an emphatic yes they would have been crucified in the media immediately.

JohnJamesRambo• 7 years ago

The government hates it when you try to make a new ponzi to replace the one they have got going.

simonh• 7 years ago

Alongside their Ponzi. It wouldn't really replace anything, any more that BTC has replaced Dollars. The only thing anyone cares about with respect to BTC is how many dollars they are worth.

leetcrew• 7 years ago

aside from the volatility, one of the major reasons it hasn't attained wide adoption is simply friction. the average consumer or small business doesn't want to think too hard about how to pay or receive payment for things. if Facebook released a simple libra api and many merchants adopted it, we might see it get used a lot more than btc.

Fellshard• 7 years ago

That's been key all along - as long as cryptocurrency remains anchored in real currency value for the majority of exchanges, then it will fail to stand on its own, as the cost of transfer to and from BTC will be too steep to warrant.

rolltiide• 7 years ago

Dan Larimer's EOS functions very similar to Libra, with Delegated Proof of Stake. EOS' DPOS encountered much of the same criticisms around centralization when it was launched, but many people swear by it just because it is good enough. Delegates ("block producers") do reverse transactions on EOS and they consider it a feature. EOS is not immutable, but it does have faster transaction capacity than incumbent chains like Ethereum and Bitcoin.

If Dan Larimer had launched Libra instead of Zuckerberg even with the same corporate block producers, a lot of the crypto community would be loving it. Governments would have ignored it.

This is all about the messenger itself. Zuckerberg deciding to crucify himself and be the focus of society's disdain.

Nice to see the state's monopoly on money evaporating overnight. Its not about whether this iteration would be better for society, its more about the competition existing.

nickthemagicman• 7 years ago

Think of how much personal data Facebook could gather on you if it knows 'EVERYTHING' you purchase or at least a huge part of what you purchase.

They've already been busted selling personal data under the radar to third parties.

It's less 'omg control of the financial system' and more 'you're not exactly the exemplar of trust with peoples personal data'

I'm all for crypto making the lame financial system we currently have obsolete but I don't know if Facebook are the most trustworthy people to do it.

darkwizard42• 7 years ago

Please read the Libra whitepapers and organizational notes. You don't need a Facebook account to use it and they wouldn't have control of the personal data on your spending...

ckastner3• 7 years ago

This is why we believe in and are committed to a collaborative process with regulators, central banks, and lawmakers to ensure that Libra helps with the kinds of issues that the existing financial system has been fighting, notably around money laundering, terrorism financing, and more.

This was inevitable, but it's surprising to see them acknowledge it.

combined with the ability for law enforcement and regulators to conduct their own analysis of on-chain activity [...] Libra should improve detection and enforcement, not set these back.

I expressed concern that this would happen a while ago [1]. This basically bypasses all privacy safeguards that clients would enjoy at a regular bank.

[1] https://news.ycombinator.com/item?id=20263861

hjk05• 7 years ago

This might depend on what you consider a “regular bank” but every bank and exchange I’ve ever come into contact with requires documentation and vetting to ensure that I am who I say I am and that I’m not not laundering money, and if the police come with a warrant they get everything they ask for.

I think you might be thinking of specific banks and shell company schemes in Panama and not what most people would describe as a regular bank.

aNoob70005• 7 years ago

Bank Secrecy Act (BSA) and Know Your Customer (KYC). I'm going out on a limb to say that most tech companies have no idea what BSA or KYC means and the paperwork involved.

ckastner3• 7 years ago

and if the police come with a warrant they get everything they ask for.

Banks requiring warrants is exactly my point.

The Libra text makes no mention of any safeguards with regards to law enforcement. On the contrary.

api• 7 years ago

This basically bypasses all privacy safeguards that clients would enjoy at a regular bank.

Once again a shift in technology is used to throw away old privacy safeguards and consumer rights and protections.

luckydata3• 7 years ago

This is not surprising. The minute Libra starts operating it becomes the main money laundering tool in the world. Depending on how it's implemented it could easily topple the economies of smaller countries, and significantly increase funding for terrorist organizations and garden variety criminals.

I don't see how any government, and especially the US government, agrees to any of that anytime soon.

solotronics• 7 years ago

lol.. I don't think people realize how the legacy banking systems already facilitate this activity

HSBC was recently fined for laundering billions for the cartels. This activity happens on an industrial scale and a Facebook cryptocurrency isn't needed for these groups to move money.

luckydata3• 7 years ago

I'm not sure how I should reply to this. You really believe I don't know how money laundering is currently performed?

sdinsn• 7 years ago

Of course laundering already occurs. But that doesn't mean we should ignore things that could further enable it.

codehalo• 7 years ago

How will it become a main money laundering or terrorist tool? Can you elaborate?

A launderer or terrorist (actually ANYBODY - good or bad) would have to be the biggest fucking idiot to use Libra and expect the transaction to be anonymous or private.

I sincerely hope you were just whipping out the typical ML/T FUD and don't believe that yourself.

anchpop• 7 years ago

What does libra do for money laundering that other currencies like zcash and nano don't already do much better?

bradstewart3• 7 years ago

Guessing here, but potentially allow you to actually mix fraudulent funds into real (or seemingly real) transactions? Assuming people actual use Libra to buy stuff. To use a Breaking Bad example, the car wash cashier says 100 people paid $30 each for a car wash (and generates receipts for those) when only 10 cars actually showed up.

Zcash is great for anonymously moving money, but you can still trace the inputs and outputs since you ultimately need fiat to buy weapons and such.

magnamerc• 7 years ago

Pretty sure the USD will remain the main money laundering tool in the world. The USD as cash is partly fungible, whereas Libra is not.

The only reason the Russian agents involved in the 2016 misinformation campaign got caught was because they used Bitcoin to purchase their equipment.

julianozen• 7 years ago

Could the government effectively regulate/curtail libra by essentially telling Facebook's financial partners like Visa, Mastercard, PayPal, Stripe, etc that they risk losing their licenses by promoting/handling Libra?

elliekelly• 7 years ago

In theory maybe, but I don’t think you’d find a politician willing to risk their reputation to pull the plug on Visa. Not only would it be a major blow to the economy but it would be a giant pain in the ass for their constituents. When’s the last time you went into a bank to take out cash? When’s the last time you had cash in your wallet at all?

Visa wouldn’t be the biggest loser in that scenario, the politicians/regulators would.

carlosdp3• 7 years ago

They don't have to go that extreme, they could just tax Libra coins like securities. That would create a huge burden on their use as currency in the US.

kevmo• 7 years ago

Good.

rwmj• 7 years ago

The Financial Times speculated that Libra transactions - because they involve some currency risk - will incur capital gains taxes (CGT). Although the CGT absolute amounts are likely to be very small, and in some countries will be covered by a personal allowance, this will still cause tremendously fiddly problems when filing taxes. I'm afraid the link to the FT article is behind a paywall, but this blog post summarises it: https://www.taxresearch.org.uk/Blog/2019/07/01/facebooks-lib...

carlosdp3• 7 years ago

It's not even the amounts that would be the killer if it's capital gains taxed really, it's the overhead come tax filing time for the average American.

londons_explore• 7 years ago

Except Facebook can just write an algorithm to calculate it all for you, and then say "write 16.47 in box 18".

Facebook could even promise to cover all the taxes owed, which would give them an incentive to keep the currency value stable.

6gvONxR4sf7o3• 7 years ago

People here are talking like the government is trying to do something bad. If this were goldman sachs instead of facebook, we'd be cheering. The financial system is complex and having the wrong incentive systems (regulations) in place can lead to trememdous harm throughout the world. If you were working when the 2008 recession hit, you're familiar with the kinds of issues that financial regulation works to deter.

2_listerine_pls• 7 years ago

People are talking like the government is trying to do something bad.

Based on 1 article you read

6gvONxR4sf7o3• 7 years ago

You missed an important word in your quotation.

csomar• 7 years ago

Imo, Facebook released its plans in the last minute, so that it can have time to launch before regulator catches up. The later they catch up, the more likely Facebook is going to dominate the market and become harder to roll back the currency.

Facebook is probably aware of government regulators looking to control it more and certainly anxious about voices looking to break it. The Libra coin being established as a pseudonymous crypto-currency in Switzerland will give it some time to figure stuff out.

carlosdp3• 7 years ago

How is a year ahead of launch "last minute"?

ilaksh• 7 years ago

The fact that this is centralized, based on fiat, easily connected to social media accounts, actually makes it the best way for governments to combat real cryptocurrency.

But I hope they don't figure that out, and give Ethereum and Bitcoin time to finish their scaling efforts.

House lawmakers ask Facebook to put Libra cryptocurrency project on hold

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