By Rebecca Heilweil
Lawmakers have pointed to Facebook's less-than-stellar record on privacy and respecting consumer trust as the tech platform's key barrier to introducing a new digital currency called Libra.
But after two days of testimony from Libra's top executive, David Marcus, legislators also want to know more details as to how exactly the Libra Association will govern the currency.
"He wasn't able to answer basic questions like: what if there's a conflict of interest," Sen. Tina Smith (D-Minn.) told Cheddar. "What about the minority viewpoint on this Association, and what happens to the voices? How is this adjudicated if there's a disagreement? Lots of questions. More questions than answers."
Facebook ($FB) says that the Libra Association, a not-for-profit organization based in Geneva expected to eventually be governed by 100 member organizations, includes both large corporations and nonprofits.
"The Association's purpose is to coordinate and provide a framework for governance for the network and reserve and lead social impact grant-making in support of financial inclusion," explains Facebook's white paper.
Currently, member entities include eBay, Lyft, Uber, PayPal, and Mastercard, as well as nonprofits such as Women's World Banking and Kiva. Facebook has insisted that once the Association's membership is finalized, the company will have power "equal to that of its peers."
But confusion as to the Libra Association's structure — and distrust of the financial interests of its founding member entities — has drawn widespread criticism. On Tuesday's hearing to the Senate Banking Committee, Smith pressed Marcus on how the Association would avoid a single member gaining a disproportionate share of power, pointing to Sen. Mitch McConnell as an example.
"They're talking about establishing this nonprofit association, which is going to be this great American idea, yet it's going to be headquartered in Switzerland. The question is: how is this going to be governed? " Smith told Cheddar on Thursday. "I said, 'I know in the United States Senate, we all have one vote. But there's one guy who gets to decide what the agenda is, and that's Mitch McConnell.'"
Several representatives, including the non-voting delegate from Guam Rep. Michael San Nicolas, Rep. Carolyn Maloney (D-N.Y.), and Rep. Alexandria Ocasio-Cortez (D-N.Y.) have pointed to the Association's lack of democratic accountability as another objection to Facebook's plans.
"Can a nonprofit organization made up almost exclusively of for-profit companies, can or should that Association have its own currency? And what implications does that have for peoples' privacy, for the safety of peoples' money, and for the monopoly power of this very big organization?" said Sen. Smith regarding questions she still has about the digital currency.
During the House hearing on Wednesday, Rep. Rashida Tlaib (D-Mich.) and Rep. Anthony Gonzalez (R-Ohio) asked Marcus why users appear to have no influence over the Association or currency's governance. Tlaib, for example, asked whether one of the member entities of the Libra Association can be voted out of its position by users of the currency. (Marcus said no).
Marcus repeatedly emphasized that Facebook, as a member entity of the Libra Association, will not exercise disproportionate influence and will only have one vote. He also insisted that the tech platform won't be involved in choosing future members, a task that should fall on the Association more broadly.
Those claims also brought skepticism from lawmakers.
On Wednesday, Gonzalez told Marcus, "the claim has been that you will not — Facebook — have undue influence over the platform. We're all politicians in this room. I think if we could hand-select our voters, we'd feel pretty comfortable about our ability to influence what decisions are made. So I would suggest that's not an accurate claim."