
House lawmakers ask Facebook to put Libra cryptocurrency project on hold - smacktoward
https://www.theverge.com/2019/7/2/20680230/facebook-libra-calibra-crypto-maxine-waters-congress-regulation-investigation-halt
======
ckastner
> _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](https://news.ycombinator.com/item?id=20263861)

~~~
hjk05
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.

~~~
aNoob7000
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.

~~~
kyrra
As someone who works for Google (opinions are my own) on the payments team, I
disagree. :)

Due to P2P, and disbursements we do for Play developers and AdSense, we are
heavily invested in KYC. And we have to comply with the regulations of all
countries we do business in, not just the US.

~~~
aNoob7000
Just curious, do you have to deal with OFAC controls?

~~~
coachtrotz
U.S. persons must comply with OFAC regulations, including all U.S. citizens
and permanent resident aliens regardless of where they are located, all
persons and entities within the United States, all U.S. incorporated entities
and their foreign branches.

Source: [https://www.treasury.gov/resource-
center/faqs/Sanctions/Page...](https://www.treasury.gov/resource-
center/faqs/Sanctions/Pages/faq_general.aspx#basic)

------
crazygringo
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.

~~~
whateveracct
> 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
>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.

------
higginsc
>“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
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
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.

~~~
CuriousSkeptic
I don’t think the interest of other large shareholders would be more aligned
with the interest of the general population though.

------
seibelj
Official Facebook summary of the past two weeks, responding to many
criticisms: [https://www.facebook.com/notes/david-marcus/libra-2-weeks-
in...](https://www.facebook.com/notes/david-marcus/libra-2-weeks-
in/10158616513819148/)

~~~
paulgb
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
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.

~~~
craftyguy
Not GP, but I find it amusing that anyone is even paying attention to
facebook's response to the question. Of course they're going to give a muted,
unemphatic yes (as you said), and the public seem to believe them and end all
questioning there. Luckily the US government is not giving up so easily.

------
mcoliver
Link to the Full text and release here:
[https://financialservices.house.gov/news/documentsingle.aspx...](https://financialservices.house.gov/news/documentsingle.aspx?DocumentID=404009)

PDF:
[https://financialservices.house.gov/uploadedfiles/07.02.2019...](https://financialservices.house.gov/uploadedfiles/07.02.2019_-_fb_ltr.pdf)

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

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

~~~
yeahitslikethat
Zucks the boss tho. I'd like to see it too. And I don't even use Facebook.

------
6gvONxR4sf7o
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
> People are talking like the government is trying to do something bad.

Based on 1 article you read

~~~
6gvONxR4sf7o
You missed an important word in your quotation.

------
julianozen
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
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.

------
nickthemagicman
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
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...

------
csomar
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.

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

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luckydata
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
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.

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

------
rwmj
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...](https://www.taxresearch.org.uk/Blog/2019/07/01/facebooks-libra-and-
tax/)

~~~
carlosdp
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
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.

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

Stable compared to what?

If the Euro falls relative to the Libra (same as Libra gaining against the
Euro) then Europeans owe capital gains tax. Same goes for USD/Americans,
CNY/Chinese people, etc.

------
ilaksh
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.

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

~~~
simonh
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.

~~~
Fellshard
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.

------
kevmo
Good.

------
rolltiide
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.

