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tv   Financial Experts Testify Before House Financial Services Hearing on...  CSPAN  July 17, 2019 6:01pm-8:04pm EDT

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our second panel is chris brummer, research professor director, institute of economic law, and university law center. our second witnesses katerina pastore, and-- columbia law school. -- gendler who is professor of the practice of global economics and manager. mit sloan school of management senior advisor to the director, mit media lab and codirector of --. the next witness will be robert wiseman, president, public citizen, and the final witness
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will be chief strategy officer's. welcome to all of you. without objection, your written statements will be made part of the record. each of you will have five minutes to summarize your testimony and with one minute remaining a yellow light will appear. at that time i will ask that you wrap up your testimony so that we can be respectful of both witnesses and committee members times. you are recognized for five minutes to present your testimony. >> thank you so much. members of the committee, thank you for inviting me to testify. i'm here in my academic
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capacity and it's an honor to be in this committee again. papers like will be are struggling to understand today have emerged as a common tool in which digital asset economies communicate with consumers and investors about new projects and ventures. false promises and emissions that consumers would need before purchasing a consumer asset. the last time i was here to share my views we discussed precisely these challenges. today we have a twist. criticisms of white paper disclosures have focused on early-stage cash strapped startups. rarely have they been directed at a multidirectional technology company with resources of-- technological challenge. this time it's different peppered with big promises in
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detail with the project-- with risk to purchasers and the financial system that are not disclosed. upgrades to the financial system, this is at a minimum disappointing. there is no mere public rain storming exercise and it said were conditioned for the adoption of a product that facebook wishes to sell to billions of people around the world. they are all the more problematic given security like features of libra coins and possible implications of us security flaws. first, the libra white paper fails to inform an unambiguous terms that they could lose their money. what it suggests and doubles down on the idea that it will
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always provide stability in terms of the purchasing power of the new currency. that is not necessarily the case. the libra is subject to foreign currency risk, something the white paper does not clearly acknowledge. it could cost money should there be a run on any of the underlying currencies in the basket. moreover, they could be catalyzed for reasons that have nothing to do with the underlying basket including a hack of calibra or revelations that consumer data have been shared with facebook or other association members. second, the white paper fails to explain that libra holders will be exposed to counterparty risks should the investment strategy proved to be mismanagement-- mismanaged or poorly executed. although the goal will be preservation, any money raised
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from interest earnings ultimately go after operational and developmental expenses and will fund dividends to early investors for their initial contributions. as a result it is structured in a way that creates incentives for the portfolio manager to accumulate over time higher- yielding investments. finally it fails to disclose how its promise of a secure scalable and reliable blockchain could be compromised by whatever is the weakest link including operating in jurisdictions with qic rules. this is just the tip of the iceberg. with a host of critical questions of selection criteria not to mention how folks are
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intending to manage potential conflicts of interest. in my written testimony i show how these kinds of issues populate the document and are especially problematic since the offering has security like features including the back among other things that it appears to operate nearly identically to ets. critically these kinds of omissions are more than just a matter of technicalities. the indications of various ways in which purchasers and everyday people are far from properly informed and not on it proper playing field, there are 99 problems in this white paper is one >> thank you mr. brummer. miss pastore you are recognized for five minutes. >> thank you very much chairman clay and ranking member mchenry. thank you to other members of the committee and thank you for
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the ability to examine proposed currency. i'm a professor where i've taught for the past 18 years mostly in the field of corporate law and finance, and line development. also, the law school center on global legal transformations. based on my research and an analysis of the paper and related documents that have been released so far, i've come to the following conclusion. first, it is designed to become a new global currency that will complement existing currencies designed as a for-profit currency. it promises to create a seamless global safe and inclusive payment system based on modern digital technologies. is labeled a stable coin and as such aims to deliver high
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liquidity-- to its customers who shall be able to exchange them against local currency on demand without suffering major cuts. to this end libra is backed by safe assets. the essence of choice are bank deposits and liquid debt of repeatable-- they owe their safety to public mechanisms in the form of deposit insurance and four credits of the issuing- -. their profit earning beneficiaries will be free riding on a public safety net for which they are not paying and extending the safety net to users around the globe. the main governance architecture resembles currency boards employees employed by countries who use-- to back there
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currencies like singapore with the important difference that they shall deliver profits for its beneficiaries. it will be allocated to the members of the libra association and or investors which are distinct from libra coins, the holders of the libra and i would suspect in the event of the resolve and see of the reserves there will be no money transferred to the users of calibra. a central note of what will become ecology is the libra association based in geneva switzerland which will exercise control of the admission of future members, manage the reserve, determine asset eligibility, decide whether to amend the protocol in which it runs, and determine when and how it will emerge from a permissions systems to a permission less system. this concentration of power is unmatched for accountability to
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anyone. the choice of the structure means that the member of the association will be insulated from liability and accountable only to themselves. it will not be accountable to holders of the coin nor to citizens of countries that create the safe assets used. facebook plays an essential role in the creation of libra, the first 20 prospective members have been recruited by facebook and given control over the startup phase. it's reasonable to assume that most if not all of the original founding members will be hand- picked as would be the management team which would be put in place after the first five members only have signed up. existing regulatory frameworks are highly incomplete. it leaves ample room for digital arbitrage. they were not designed to govern digital currencies and currently use a case-by-case approach to extend reach which
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is no match for the fast-moving technological change. libra's global reach exacerbates the problems in many associated activities associated with managing activities will be with on beyond the reach of regulators in the united states or any other countries for that matter. the current level of the regulatory corporation does not match the versatility of a private actor such as facebook to pick and choose from legal systems with laws and regulations that best suits its needs. >> you are now recognized for five minutes to present oral testimony. >> members of the committee,
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thank you for inviting me here to testify. it is so good to be back with you here again. i began my finance career in the private sector. leader as a treasury official when i first testified, i was also a witness of the sudden asian financial crisis and was later an advisory . after the crisis i served as chair helping reform a $400 trillion swaps market and is now wanted to be a professor of the practice at mit teaching about digital currency. these have taught me lessons that i bring to consideration of facebook. first, all of finance has one foundation and its trust, for hundreds of years. unfortunately for facebook for some unexplained reason they chose to make bold proposals
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when trust is not in good supply. second, the labral proposal may seem unprecedented if not just for sheer breadth and scale. we seen this show before. trust us to revolutionize finance. and run, trust us to set up sophisticated electronic trading. what did we get? scandals, manipulated electricity markets. long-term capital management. trust us to set up a new type of algorithmic hedge fund with systemic risk. libor. trust us to set up the world's most relativist relevant interest rate. manipulated rates on trillions of home mortgages. these offer millions of americans and our
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personal for me as i lived each one of these in each sector trying to clean up the mess. third observation. it has already made great strides. leapfrog, big finance, and dominating chinese payments. amazon coin, apple pay, and recently apple announced with. facebook has tried as well with limited success. critics closed and facebook messenger payments closed peer to peer up this month and the pilot has stalled in india. the reserve where the money is
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needs to be regulated for what it is. if for some reason technically the law does not cover that, then congress can step in and ensure that you can. regulating the reserve under 49 statement of transmission laws bring tough lessons of shattered backing and just doesn't make sense. there needs to be tight restrictions including prohibiting loans. i was glad to hear that today and regarding custody of funds. that's what china and kenya did. they said it was very restricted when big tech came in. second, the manager should be registered as an investment advisor. third, custody in calibra needs to be tightly regulated ensuring that facebook doesn't
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use lose or abuse. it's part of the economics. they want to use those coins and need to protect the data by true firewalls and not just customer consent clauses. fourth, the accounting of the payment system, the blockchain should adopt payment infrastructure rules consistent with federal reserve policies and leslie weaver will have dashiell leslie it will have the same safeguarding against activity. being registered will not stop the rest of the network. the broad, global network is no easy solutions. the trust, so importance to finance, easy to lose, best to verify as members of the republican in democratic side said, and critical to be responsibly regulated. >> thank you.
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mr. weissman, you are recognized for five minutes. >> thank you very much mdm. chair for holding this hearing so quickly after the announcement and treating this with the thoughtfulness and care that it deserves. facebook is not making the proposal because it's interested in competing with western union. they are making the proposal because it wants to be in the middle of as many transactions that occur across the planet as possible. if they can get all of them, it will take that. that's a serious business that this committee must be paying attention to. i'm going to raise three concerns with facebook's proposal to be ameliorated with -- aggressions but not cured. i want to make a point that follows on what he just said. facebook is a company to not be trusted. i mean that in two senses.
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first, facebook has repeatedly, not just-- repeatedly violated its own privacy policies. not anything external but they adopted their own policies and violated them not once, not twice, but over and over and over again. look at the last consent decree. wait until we see this decree, see the listing. this is a company that cannot be trusted but it's worse than that. even if facebook maintains its promises, they are unilateral, voluntary, and subject to change at any time. key features of the proposal are completely up for grabs and changed over time. for example, the one to one reserve would make a difference but they could unilaterally alter that commitment. the idea is the money will be invested in stable currencies.
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it would make a difference but a promise that could be unilaterally be invested. the idea that there would be a firewall between calibra and facebook, unilateral promise that would be invested and you'd be foolish to think they would not change that would because they've changed the privacy policy almost every year. three particular considerations i want to raise. first, the competition policy and monopolistic implications of this proposal. as we've heard immediately upon adoption of calibra, it will be available to 2.7 billion users around the world's. it is a-- that facebook will dominate the market for libra and perhaps all digital financial transactions. there may not be a lot of other competitors but we will see facebook immediately extending dominance in social media to dominance in the payment transfer business.
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the association itself has the makings of a cartel. there's talk about giving discounts among the members and will be used to advantage those on the outside under the leadership of the dominant member of the cartel, facebook. we have a long tradition separating commerce, that has expressed wisdom and protected us from a lot worse financial crisis. we need to apply those principles going forward. second, the concerns about consumer protection inherent in the proposal, the idea that you will make no interest loans and adopt foreign exchange currency risks. in this new ecosystem massive consumer protection problems as you have a global privatized currency. what happens when you get those
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loans? the choice of law became ukrainian law. the third problems, privacy. no reason to believe there will be a separation but even if there is facebook will understand what's going on based on the use of facebook and will gather all this data. whether or not they do what they say they're going to do, we elect to see corporate surveillance but only imagined in science-fiction dystopian models. it's a matter of them monetizing our lives and worsening the algorithmic discrimination already in an increasing problem and leveraging the data to cross competitors. it's a matter of overall less innovation, not more innovation in the digital economy and the rest of the world's economy.
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finally, i want to see this committee is flooding the idea of the keep big tech out of finance act which i think is the correct approach going forward. of this is far too dangerous to permit to proceed. that's one way to shut it down and we hope this committee will do that. >> now you are recognized for five minutes to present your oral testimony. >> good afternoon members of the committee. i am the chief strategy officer of coin share. a digital asset management firm that operates-- jurisdiction. we managed $800 million in assets on behalf of thousands of investors. i'm also here to share insights as a business owner and investor, and advocate for and user of crypto currency.
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today i would like to discuss crypto currency, namely big coin. to emphasize why it is different than libra, and outline what that means for innovation here in the united states. bit coin is the best-known most valuable and best know crypto currency. it is a technology, a network, net worth, and crypto currency. bit coin as a technology is not regulated. much like the internet, the network could be considered a public good. however the companies being built are subject to regulations in respective jurisdictions. i've invested in currencies in over 30 countries. half have been incorporated in and operated from the united states of america.
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the united states enjoys a robust capital market and boasts a long tracker to track record of a place for innovators can build. of these companies employ nearly 5000 people in cities like san francisco, charlotte, new york, boulder, austin, atlanta, but also london singapore zérich and berlin. it has reached a point of inevitability. it is inevitable that the ecosystem will continue to grow and contribute to the digital economy. the question is where. the approach which has been used in the past is challenging to apply in a digital world that is not constrained in the past. we are seeing countless imitators which follow some features of but are decidedly not crypto currency.
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libra is not a crypto currency. i'm not here to talk judgment and i commend altruistic aspirations but they are just that, aspirations. first, it is decentralize meaning no entity or group has the power to block or send through the network. it will have the ability of censored transactions. second, bit coin is its own asset backed by its own scarcity and demand. there is none that hold assets that give bit coin value. libra is backed by assets that are a regulated activity. lastly, bit coin's permission list meaning anyone in any part of the world has the ability to enter and exit the network without requiring permission. the libra network is controlled by a private group who will
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determine who has permission to access the network. it supports thousands of companies all around the world. libra benefits one entity, facebook. facebook is not a public entity. it's a privately owned for- profit company. libra may represent an exciting opportunity for bit coin but cannot and should not be compared to bit coin. like the internet it is critical that it coin remains open for critical innovations. companies serve tens of millions of customers and billions of dollars of legal commercial activity, and employ thousands of peoples people building and crypto currency networks. while the community is global we should endeavor to keep companies here in the united states regulated under our laws to the american people and the economy, not foreign jurisdictions.
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that future is not five or 10 years away. i urge you to view bit coin is open public networks that enable innovation and growth and to treat libra in future imitators, and there will be many, in the context of the fact. by the efforts led by corporations holding billions of dollars of money. these are not big coin or crypto currency. i think you for your time. >> i recognize mr. clay who is the chair of the housing committee, recognized for five minutes. >> thank you madam chair and let me think the panel for your testimony today. let me start with mr. weissman. many people believe that crypto currency can coexist within our current monetary system given that crypto currency is
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only a small fraction of the economies financial assets. however, if an entity like facebook with 2.5 billion users decides to go ahead and bring libra to market, this could change rather quickly. how could this pose a threat to the us central banking system if the majority of users use libra as a viable currency? >> i think the series of potential risks has to go back to the systemic risk crated by libra itself. it will require massive intervention by the public or the alternative is to let the
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whole thing go under which seems impossible to remember imagine.. it may encourage runs on foreign currencies. not the dollar at first but maybe eventually the dollar. if you lose confidence in the ability to move immediately and to an allegedly stable alternative currency, it sets up a perp actuating cycle that will create another kind of financial crisis. i think the scale of this proposal is such that you have to run scenarios that are hard to get your head around and take them seriously. >> prof. brummer or mr. weissman, regarding sanctions can you explain how the associations and the companies that grow out of the construct can ensure that regimes will be followed?
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>> thank you for that question. one of the challenges that pertain to this ecosystem is not just a problem with sanctions but anti-money laundering and the way in which it is being set up is ultimately the weakest link can become a gateway for wrongdoers. the promise that facebook is making is to say that our infrastructure that we are developing like calibra will be subject to all relevant us rules. the challenges that it was creating a platform that will allow others to create an infrastructure outside of the united states and outside of internationally a well supervised regime, making the promise they will develop certain kinds of codes of conduct are uploading those
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into the ecosystem. >> how to prevent how did they prevent getting on that platform and exchanging? >> if there is the anonymity that they are claiming, and the explicitly state that it will allow clients to hold one or more addresses that are not inked to the real-world identity, which by the way seems to-- the travel rule which requires institutions to pass on information including the name and address of the transmitter, it seems to certainly enable in the absence of further elaboration exactly how they plan to prevent threats. >> let me ask anyone else in the remaining time on the panel, what does the association need
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to do to vet those who need to who wish to join in the build on this blockchain? >> there is not currently a way that you could actually foreclose someone on the sanctions list from transact. the only way that you can do that is if you literally put into the computer code what they call libra core, put in prohibitions. your second question, the libra association because it could control particularly for developing countries, the monetary policy, it needs to have wide-open governance and right now is largely large corporations and a handful of nonprofits. >> ranking member mr. henry?
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>> my question is about, you've given your testimony. you make the distinction between libra and crypto currencies. let's talk about crypto currencies. when you have the president, in the same week talking about crypto currencies a decade after the white paper, it's probably a decent thing to draw attention to the industry. >> i've been working in the digital currency space for the last five years and individually as a member of this open source global community for the last seven years. >> let's talk about the opportunities of crypto currency and happening across the globe? >> absolutely. >> you mentioned there are
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challenges working in the united states. what are those challenges? >> the lack of jurisdictional and regulatory clarity. i do commend many of the regulators that companies interact with. law enforcement, banking regulators and policymaking bodies. even in the characterization there seems to be key differences. they have long deliberated weather they are securities or not and of reach the conclusion that it is not a security. a digital commodity if you will and in contrast this inconsistent treatment makes it challenging for companies to determine how to operate here in the united states. it costs a tremendous amount of capital to hire lawyers and to
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come here to dc to speak with representatives on these important topics. this is a concern to me. >> what's the key take away? >> we need clear guidance. much of switzerland has laid out establishing a clear set of policies and regulatory framework that has been applied consistently. >> so permission list versus permission networks. let's talk about the distinction between centralization and permissions for mission less permission list versus what is libra. >> the other idea that started with open source development and a group of people that establish the foundation of the internet. similarly, a network established by-- that run
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computers around the world is open and accessible to anyone. anyone can make proposals to change the code, anyone can audit the code and most importantly anyone can build a business on top of the network and use this to drive innovation whether that's enabling new types of value transfer or enabling all types of other services we can't imagine. >> why is that important? why is that an important distinction in architecture? >> as other experts have discussed, there is an anticompetitive proponent to what facebook is proposing to do. this is a private group of corporations who have ties to executives who will be responsible for determining what the code is, who gets to participate, and what applications and products and services are allowed and
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disallowed and distributed crypto currencies are. they are open for anyone to build on. libra is a private for-profit enterprise the benefits large corporations and for-profit entities that have a tremendous amount of power. >> what is your take as another competitive force? >> my position is this. facebook should be allowed to innovate just as anyone else's but it should not be allowed to pursue this path under the guise of being an open crypto currency. that analogy is dangerous and factually incorrect representing something entirely different and has been categorized as an etf, a mutual fund representing two classes of interest. it is a high competitive effort that makes it harder for
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startups and innovative-- enabling digital value transfers. >> crypto currency and digital assets are the wave of the future? >> absolutely. >> mr. velasquez's wreck-- ms. velazquez is recognized for five minutes. >> earlier today i told mr. marcus this is not silicon valley and that problems with libra and the association need to be worked out before the date of launch. he was unclear of whether or not libra was willing to delay. do you agree that libra should delay the launch date until concerns have been addressed and approvals have been granted? >> of many of us questioned mr. marcus this morning on the
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decision to place headquarters in switzerland. why do you think they chose switzerland for headquarters? what advantages could the swiss regulatory systems offer libra that the us doesn't and what problems does this present? >> i do not want to deny the fact that switzerland switzerland has the effect of being the home for many international institutions but it's also interesting because it is a national organization that is a public nonprofit organization. in terms of the regulatory benefits i think the set up of the association has interesting benefits because it can set up an organization that supposed to be nonprofit but they use it to get profits back to members. i think that switzerland is trying to position itself as a jurisdictional hub for crypto
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currency and has issued a number of papers where they are trying to do so. it has the benefit but having more lax financial regulations. >> icing-- i think that everything was offered but they also think that under swiss law is probably less likely that it's security then under us law. it's what we used to call regulatory arbitrage going on as well and the tax law arbitrage that was mentioned that you could have a nonprofit and still pay dividends which is foreign to the way that we think here. i think it's also a signaling effect that they are less controlled by the us. when libra reserve gets big, if any developed countries will use the libra, i think it signals
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that we are not under the control of whatever future us president and sanctions regime in the future. >> earlier today i asked if the libra association will be waiting to submit to enhanced oversight, if it was designated by.she initially responded by saying the libra association has no plans to engage in banking at tiffany's. as you both know, we gave this specific authority to designate nonbanks as a-- so they do not threaten the financial system. in each of your opinions what time of systemic issues could libra and the association pose
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the investigation? there could be an incentive to ultimately liquidate holdings so that destabilizes the coin. secondly, if there's some kind of operational failure people can decide. if you scale up, it's entirely impossible in part. what if they decided they require the use of libra for their services or to offer consumers benefits? then you can imagine it becoming systemically important and as a result that's a huge challenge. people are seeing them regulate my a bank but one of the
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questions that i think is worthwhile is would facebook even be eligible for a banking license? a review would require an investigation of, say, facebook's earlier violations. >> because the united states is essentially with its own sovereign debt and-- that may be used will probably be the country that will have to backstop on the uncertainties even if it emanates from elsewhere in the world. >> the generalized-- gentleman from arkansas? >> mr. weissman thank you for your watchdog work on behalf of americans. >> after the questions today there's a burden hanging over the room which is that it's facebook here testifying. if this were general electric and
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were proposing this innovation you would still have your same questions would you be downshifted a level, we could say j.p. morgan chase, a personal view on the question. >> you know i don't want to say anything nice about this companies but absolutely correct. a couple of reasons pick >> you would say with logical reasons many americans are frustrated with-- >> two key reasons. the history of privacy violations, and no other company can do what facebook can do and suddenly make a peer this new product inside your life and mind. >> thank you for that.
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>> we've separated commerce and have a long legislative history, but the business of banking is taking deposits and making loans. you are not legally in the business of banking. so when you think about what you've seen , would you say that remains to be seen and we we are having this hearing? do you agree that you suggested they be regulated like a bank. >> in my life it has been about finance and money. i think when you take someone's money and you invest it, in this case
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they want to invest tightly and narrowly, we have this term shadow backing not regulated by banks. i think it would be malpractice to leave that to 49 states. >> i think that is what this is about, to figure out what is the best oversight. i think it was open to say we are interested in what the right oversight is. thank you for that. i was very intrigued and thank you for the conversation. i think a lot of international people own apple phones, attend the world bank meetings in washington dc. a lot are satisfied that it's headquartered in new york. i'm shocked that we have to go to a neutral country in order to have global acceptance of a
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products so you are happy to have those in america. -- a good location for this to be headquartered? >> absolutely. i think there are two fundamental issues. in the us there are a number of different agencies and oversight of various functions that the libra association would like to perform. on the other hand, switzerland where it is headquartered is in a place that has been open.
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environment for this activity. i do not think were putting the genie back in the bottle. and the use of tokenization is going to be around the world as we watch i would like to see the innovation here under the right framework. i thank you for being here and i yield back my time. >> thank you all for your testimony. and gary gensler it's good to
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see you here today. you're with us in the depths of the financial crisis. and i suspect you may agree with my earlier statement. that no large company set out to break the financial system. through a combination of loopholes there has been major systemic crisis and the past decade. what i want to do is ask all of you some questions that i asked mr. marcus this morning i want to point out an intellectual sleight of hand. that was stating that that they seek to build a system for money transfer. it is consistently made to
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paypal are western union or venmo. but users don't hold wallets on those platforms. they do not store money until it's used in that account rather customer accounts held at bay are deducted when a payment is made. let me ask a question. i am worried about the systemic risk. and i asked mr. marcus this morning 's facebook managed to 10% of the current user base to the labor wallet would you agree that that would be a systemically risky financial institution? and would be designated as such? and do the
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regulators have the capacity to develop dedicated oversight regimes for facebook. i will start with mr. gensler. >> that's in excellent question. if facebook was managing those assets. it would be systemically important. and the question about the expertise of the federal government level. it is precisely the fact that you have to think about core needing appropriate responses. not just in terms of banking but with all those consumers and the frailties that we've been discussing all day long. how do you protect everyday americans from that risk. it would have to be elevated to customer protection.
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>> i'm in a give a quick technical answer. having you worked through that. there was two systemic provisions. one is companies. there was a third on activities. it depends on the size, if it was 10% of the user base. if there was small balances. i think that congress made sure that it they couldn't make it systemic. it may be a little challenging. if the balances were large, then yes. is a systemically important to clear the system. if it was 10% and embedded in the world that way. i think it is quite likely that they would be able to do it. it would depend on the facts
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and circumstances. >> i do not know given the questions that are being asked. when we were talking about it through security or commodities. who would be the regulator? what would be the appropriate regulatory authority. should be listed so that they are all regulated? or should they look at creating a new regulatory authority? >> i do not think we need to write another regulator in washington. i think if it impinges on investor protection. a great poet said that if it? like a duck, waddles like a duck, it is a doc. this thing looks like an exchange traded. i am using common sense. if congress needs to fill a gap
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i would do that. >> the gentleman from ohio is recognized for five minutes. >> thank you madam and chair and the witnesses are here on this important topic. mr. gensler you mentioned arbitrary, the fraudsters there were launching securities in violation of that law. that regulatory framework that it was pointed out has driven a lot of companies to find certainty in switzerland and singapore. what a bright line test that says that if it meets this test right here. we know that it is a security? if it falls on the other side we know that it is a not. what it provide the certainty that the market needs? >> you could pick but it could
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also provide security for lawyers to work around it. i think whether it is a supreme court are just in the last few weeks that the sec put out a lot of guidance. it has been slower than what we want. i think that it under chairman clayton that there is a certainty to this area. >> unfortunately, i appreciate the efforts. but frankly this is congress's job. if you want to live with the court decision, and apply the test if you're swinging and orange grove hammer a lot of things look and orange grove. we have provided that in bipartisan folks. that lays out a four part test. you don't have to go on a case- by-case basis and clear the idea with the scc.
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maybe talk to a person or didn't. maybe of two years before you need to launch? a lot of companies have sat down and talked me and said no offense but we don't trust you were going launches in switzerland or singapore. we want the certainty for the market. i want ask one question that's specific to libra. the association would be governed by a board. they have a central control, i think those seats would be considered an asset. they could be sold, they said they will be governed in a different way? the proposal isn't just a bundle of currencies but short-term securities you just have to apply existing laws they would be treated as a security, is that correct? >> the members of the board would get a libra token.
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i think that facebook has agreed to that. speck you've highlighted a lot of information about that coin and the distributive ledger, decentralization, a lot of people in this space will use the phrase that you may be familiar with. there is a bit coin and then there is scheck coin. the bit coin network has been tested. and the protocol has been tested. people have tried to co-opt control of the source code and push it in certain directions.
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and it has withstood the test. it has been tested on has had the benefit of spending the first five years operating in an environment of innovation and not having regulatory attention. >> is there central authority that can dilute the value of bit coin. they can only be done through the products and services that people utilize. like coin base. >> that is a u.s. company that is regulated on the business model. spoke just like the treasury doesn't change the dollar, the banks do that. you can still appear in transactions because with open source code you can have a wallet. >> absolutely. but these are very different than what they call coin.
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they have their assets at risk. we need the certainty that legislation can provide. and i hope we have a hearing specific to the token tax. i yobak my time. >> mr. scott is recognized for five mins. >> thank you chair lady. first let me say what an excellent panel we have very knowledgeable. thank you. mr. gensler it's great to have you here. we did a lot of work with the fcc. it's a good to see you again. let me tell you what i think is
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the achilles heel for libra. this morning if you remember my testimony. i kept asking mr. marcus about the white paper. i looked at this white paper. and i think we found in achilles' heel. here is one that we may have omitted. it states that globally 1.7 billion adults remain outside of the financial system with no access to traditional banking i question him on that. and he assured me that in order to obtain a libra wallet ,
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there must be strong requirements in place. including a government issued id. particularly when you're dealing with online activity? when you're dealing online one of the big reasons that consumers are not able to access services is due explicitly to a lack of identifiable proof of identification. so how do you see libra expanding access to financial services to the on base, under
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banked, 1.7 billion adults across the world? particularly on an online platform. when you cannot simply hand over an id card like you can to a bank teller? and at the same time navigating the need to verify customers identification who may not have a government issued id, and are unable to get one? how do we mesh this with online? i think that is in achilles' heel? we are moving fast in technology , but if i take this, i can't given id card?
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>> three quick points. sub-saharan africa, half is on bank. and half of them have mobile phones. that's the good news. the sad news is you're absolutely right about government id. and i think that the libra wallet will be inside them money laundering laws. there will be a lot of other wallet providers, and they will be in jurisdictions that may not take the precautions to get government ids. the third point is that it is absolutely true that this will have a lot of the leakage. just like there's a lot of a bit coin tokens that are floating around.
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>> i think you're on point. it is a conundrum. if you look at what they have said in addition to what they have testified. if you walk up to a convenience store, hand in the money and get libra. that is the vision. they also say that the libra wallet will connect with other wallets . so even if they know your customer, a different wallet that doesn't could still put the money back into libra. i think the adoptees for tax evasion is unlimited. >> the tennessee from has five minutes.
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>> i want to better understand the financial services monopoly idea. the libra association has 28 founding members , many who have played in the payment process. some of these terms are very large. they have billions of card holders and process of billions of transactions. some have argued that this association is a thinly veiled attempt to create a bank by facebook. i am reminded of another payment innovation is started in the 1950s and 60s as associations of like-minded companies that bank card payment networks. banks issued their own cards and banded together as associations to create networks that work for the consumers,
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merchants, and issuing banks. those associations were spun off to companies that we have in use today. i'm not saying the libra and bankcard network is the same thing , it doesn't strike me that there are similarities. their similarities and how we look at innovations. if we were to think avenue libra is up payment innovation can you talk a little about similarities between card payment in its early stages and what libra is or what it might be? >> i do not think that we are saying that facebook doesn't have the right to innovate. we are seeing a wave of financial technology innovations. i think what we are seeing is the ability to compete and
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create new financial products and services should be possible regardless of and institutions size. i think what facebook is attempting to do is different from creating a card payment network. facebook is already in the hands of 2.7 billion users. it is on everyone's phones and laptops. what they are attempting to do is pass off this idea as a crypto currency, it is not. they are attempting to use regulatory cover to get away with doing something that would typically be regulated which is asset management. it's fundamentally different. >> okay going to specifically with the concerns of what a libra is and what crypto currency is? >> my fundamental concern is related to stability. if we think about the various
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risks that investors take. we experience this in the united states 10 years ago. when somebody purchases libra they are giving up their real world assets to receive a tokens. these are placed in depository banks and institutions. this is a core banking function. it presents risks and retrieving the principle that they used to pay the libra tokens. but why is it better for consumers? >> when you buy a bit coin, they are not buying a pool of assets. they are not exchanging principles for natural instruments. they are purchasing a digital commodity. it is not a pooled
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fund, there's no assets or bank that has to back the value of the bit coin. it is fundamentally different. >> as we move forward and think about this independent association. there comes a time when they might want to monetize their association. can you paint that picture and how it works? >> particularly if the association is associated with the flow or interest off the reserve. that would be very attractive. they are monetizing that upfront calling it libra investment tokens. i do not know if facebook is going to be successful. this is their fourth attempt at payments. we know that in china the two
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big companies that dominate 9% of payments. >> you talk about the requirements for crypto exchange in a general? do you think that libra should be subject to custody and civilization requirements >> i would say yes. i think the custody at exchanges has been a honeypot for theft and cyber security risk. if congress could step in and give clear authority whether it is the sec or the cftc to regulate the bit coin exchange they could be put into this
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token. >> i like to make a factual distinction . libra is not a crypto currency. they are fundamentally different. it is a regulated activity and has been for the last five years in this country. i want to distinguish and draw very clear lines.libra and crypto currency should not be mentioned is the same thing. >> i think that is right. and they will control the wallet funds. it is ultimate custody. the functional activity. regardless of whatever digital assets you're dealing with. certain kinds of questions as to what happens to the responsibilities of a bank when there is a fork in that crypto
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currency pick those questions have to be answered. they are not clear as to what those answers will be? >> you talk about the abusive trading practices that are possible with current crypto exchanges? and could be possible with libra ? >> you may be remembering the filing with the sec about fake trading. most exchanges are not regulated. other than the custody issue for money laundering. it is rare that they are regulated. >> is there any way to prevent wash trading? >> it's not even about the technology. around the globe
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the large exchanges are not regulated by the fcc or similar security regulators. >> i have to point out that many exchanges are regulated by the jurisdiction regulator where they operate and by the customers that they serve. this is a case that is being tried in new york that is looking at number exchanges the second distinction is that since 2016. all of these exchanges are under the purview of u.s. regulators including the cftc. they have created a market oversight committee that looks at these practices and accusations that have been leveled. and there is effort within the industry to self regulate in absence of clear guidance. i will say that the wash trading activity is not happening here in the united states. exchanges here are regulated. >> i differ with my fellow
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witness. wash trading is happening here. they are regulated for custody of the funds. >> it seems like they are anonymous it's hard to identified. >> it's a notable that there are no explicit conflicts of interest. even from a self regulatory perspective. as it pertains to libra. >> and it relies on the pseudo- anonymity. in the absence of going through and finding out that the same person was on both sides. there is a beneficial owner on both sides of the tray. must there's a way to pull the mask off, there's no way of detecting it. that is sort of
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an unsolvable problem as far as i can tell. i want to thank you for your input on this important subject. i yield back. >> the gentleman from kentucky is a recognized for five minutes. >> thank you for your testimony and expertise today. it's been an excellent panel an interesting topic. we are all learning a lot. as i was saying earlier, i think the presumption should always be on the side of financial innovation, especially when there is a promise of a greater inclusion and reduction of transaction costs and a friction. i do hope that this will result in a positive impact on our society. but i think we should ask probing questions and i appreciate the panel for offering healthy skepticism on one point or another.
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let me start with the basics. i'd like to go back to ms. demirors. you made the comment that libra is not the same thing as crypto currency. can you elaborate and explain that to me? >> there are three fundamental differences that i would like to point out that are recorded in my written testimony that was submitted. the first is that crypto currency like a bit coin is decentralized. no one person can block that. libra has them entity of 100 members that can manage the network and block transactions. >> only for five years? >> that is the claim. i don't know how they planted decentralizes. they have not offered a central plan. it is a word that is used often but it doesn't really have a tangible measure. i'm not sure how they will achieve it.
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the second point. it coin is not backed by anything. it is its own asset. it is a digitally scares access. it's a new type of asset which is a challenge in fixing it into the box. it is a backed by anything. there is no bank that holds funding that is at risk. in contrast, libra is the opposite. it is backed by currencies. stable coin. that is what they like to call it. stability is relative as we learned through the history of financial crisis. libra does hold assets that substantiates the value of this token. the security of those assets are to secure the principle that they used to obtain libra. the last point i will make is the point of control. anyone can build upon a bit coin or crypto currency network. the code is open source.
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just like the internet is a public good. and people can compete and build businesses. in contrast, i do not know how the libra network will be open when it is controlled by 100 for-profit organizations that are closely affiliated with facebook. what i would like to point out is that competitiveness, and the ability to level the playing field to compete in the same market is important. crypto currency is an open market. and libra is proposing a close controlled market. >> let's talk about the sustained coin idea. is it a positive innovation to reduce the volatility? show we think this is a positive development? >> i am not commenting on whether or not libra is positive or negative.
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it is the fund that is backed by asset. i am not arguing that they don't deserve that. but it is not the body shield. >> it's a very interesting innovation. it's raised policy issues. with the idea that there may be as stable valued coin that is backed by risk in africa, latin america, or asia. there may be a demand for it. i would not count it out. what is the incentive? what other holder of a fiat currency exchange and it? but just like in many countries there is a lot of transaction dollars like in venezuela or
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ecuador where they adopted the dollar as an official policy. >> can somebody address the risk of disruption to central banking, and traditional monetary policies? >> it will definitely disrupt monetary policy in those countries. if they go to libra instead of dollars. and if it was significant it could start to influence the currencies underneath the. if they association said it would be 30%. it's a transition. >> thank you i will have a lot more questions as this develops. i yobak. >> the gentleman from california is recognized for five minutes. >> hello. i was told on my way in that
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giving praise to the panelist is not my style. i'm here to thank you for your service. i would like to pick up on something that was said about the differences between crypto currency and libra. a lot of the concerns i have about libra i do not have about crypto currency. there are issues with crypto currency and many have been eliminated. i think your testimony is important. i want to pick up on the point that was made about libra being back to in a way that bit coin and traditional crypto is not. i want to ask, we heard mr. marcus talk about how libra is back. so what you think he means by backed? and how should we have confidence in that? and how is is backed stable coin different then the coin in
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kenya? >> i'm going to agree with my colleague pick this is very different than bit coin pick for the three reasons that she said in other reasons as well. i think it's very different. the central banks in kenya said that anything in that fund that was held by a phone company had to be in trust, it cannot be loaned, and 100% of it had to go into the kenya banking system. similarly in china they made it even more restrictive. with % going to the central bank it's different because this is multicurrency. and currently it's a very different. they are saying don't treat us like a bank and the exposition about the wildcat banking e.r.a. of the 19th century is very helpful. >> i think it can mean
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different things. is not that the customers have a direct claim. but that the reserve would be held with the assets and they can provide the liquid nature pick the important thing i'm try to make is that safety comes from a backstop. ultimately it's a public service provided to a private company. and when we talk about the corresponding approaches i asked mr. marcus do you think that libra would be subject to insurance scheme? what is the backstop? when you tell customers that it is back that they know what they are getting. i also wanted to ask. he didn't take me up on the offer to have the regulation. i was happy to run through the alphabet soup.
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i wonder if you could comment, and we could go from right to left which regulator is appropriate for libra? >> one comment. whether or not facebook if it was to become a bank would satisfy the de novo process. it's entirely uncertain. the ambiguity that is throughout the white paper. when you think about it in a monetary sense of what they are really doing on the structure is creating an etf. you are using the language of monetary work. and it's not at all helpful to a potential purchaser. at a base level, you're going to have to go with regulatory
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oversight. and then looking at what dear different differentiates. and the systemic implications that ramp-up from there.'s but this is unclear if this is a problem for the consumer protection subcommittee. >> many categories do not fit. it's how you get the comparative advantage. using the language and a smart and discriminant way. to avoid the framework that we have. let me add one more thing. we are talking about a multi- jurisdiction regulatory that is needed for global currency. and we think about how complementary the regulatory is elsewhere. >> i welcome each of you to follow up with your thoughts. i'm very interested.
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>> i will recognize myself for five minutes. let me think a panel for being here, you spent long hours. all of the members have taken the opportunity to ask questions of mr. marcus. i appreciate your participation here today i thank you for helping to unfold and make transparent some information that we should've had access to that we did not get in the white paper. let me ask this? i have listened to many of the questions that have been asked. and you have covered an awful lot. i've been thinking about the association, and the fact that the association includes 28 companies. and he said that they were targeting about 100.
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do you think that it is going to go well beyond that a number? what are we looking at? big companies with big databases that supply whatever goods and services? with libra it will be the currency that you have to have in order to have these goods and services. am i just daydreaming? >> certainly they have not disclose the selection criteria . you would have to expect given the resources available that the entry point in the expectations of new members would be very large. there is no clear path to reaching the decentralization infrastructure that the mr. marcus is promising evolving into a bit coin, i do have
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doubts as to how quickly they would be able to ramp-up. >> i'm thinking beyond 100 members. there's going to be a smaller governing group that will be making these decisions for everyone. all there is nothing that forbids a. and if it helps the distribution of a product, the rationale would be distributing the laborer. >> what i think we have seen historically by many members consisting of members to govern something that does involve profit, and we are speaking
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about the largest consumer base in the world. that is going to become contentious if we look at a smaller organizations that have many challenges. my concern is that the structure is not clearly laid out. it's not laid out where the balance of power will be. if there is an overriding power entity, that are party do not agree. >> yes, mr. weissman. >> they plan on dominating. it's a cartel. >> is it possible that all of these companies could end up with all of this data being emerged into a humongous amount of individuals in the database
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that they could be merchandising and marketing to? is that part of what is going on here? >> until there is more transparency the organization that join will need to contribute $10 million to join. not just anyone can join. i wasn't invited to join. none of the firms i work with was invited. and i think that that is a fundamental question. if facebook aspires to create this open book consortium, why is the selection process opaque , and wise it only associates of facebook executives. it's not a criticism, but i think that more transparency is needed. >> so i define this is the
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billion-dollar boys taking over. thank you very much. now we are going to hear from the gentleman from california. your recognized for five minutes. >> we have heard from facebook that they are dedicated to adhering to the anti-money laundering rules. mr. brummer if there that dedicated, why would they hire someone who is head of paypal when they were fined $8 million for violating anti-laundering laws? >> i cannot answer that question. none of us can. will anti-money laundering laws be binding on institutions
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headquartered in switzerland? made up of international businesses? >> certainly u.s. rules would not apply the bigger risk lies with those jurisdictions that are so weakly regulated that they fall outside of the national agreements. certainly swiss rules relating to privacy and financial regulation are not just different but they have historically been weaker. the real questions that do arise in promoting the norms and safeguards that we have in the united states. >> the history of currency, the
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history of the dollar. at first it was based on how much gold we had in reserves, then when we had an ounce of gold did we print $35, and then we started printing more than what we had in reserves. we got to the point where it was non-redeemable, and now the dollar is valuable, gold is an interesting thing. it's a nice thing to have. nobody says i'm not interested in having u.s. dollars because they are not tied to gold. if he can replicate that, then he can print reserve currency. , they promise that they will not do that. the double only be 1 to 1. is a promise from facebook binding
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on the libra committee? so if they change that that means they can print money? be quite an incentive? i think a private organization has a problem, what they cannot do is put productivity of the entire country online. they could try. they are creatures of habit. if i can go on amazon and buy stuff for 1000 libra or 1000 zuck buck's. i find as long as i can do that there valuable things to have.
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why don't i addresses to mr. gensler. we have a problem people in los angeles are sending money to their grandparents in guatemala. and they are being charged a large percentage to do that. so how is a guatemalan grandmother supposed to buy a bag of food for a bunch of zuck buck's? we are told if we do not buy into this wonderful new thing that we are disadvantaging that grandmother is it really a solution for her? >> we found that the coin is not being used that much in retail transactions for the exact reasons that you mention. and certainly not in rural guatemala.
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so service provider has behind the scenes libra or the zuck buck would be traded for local currency so that the store owner could get it currency and there would be crypto exchange. >> it sounds just as expensive as what is going on it now. i yobak. >> the gentleman from michigan is wreck nice for five minutes. >> thank you for being here. i have to tell you that i am learning a tremendous amount. the young people on my team have been watching this closely. na been teaching me a lot. the more i listen and was forced to stay here a little bit longer which is okay, i was able to hear a lot more and learn more. one of the things that comes to mind is the systematically
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important institution. but first up mr. brummer how to feel better private company issuing currency? historically have you ever seen this? >> we have. what a private company does with money, when you use other people's money, you can expect that the government is going to want to know what you are doing with it, and have you rightfully receive it. whether or not it's wildcat banking where you're not just taking the money and keeping it in reserve. but your lending it on to someone else. the challenge when you have a
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private institution that is not just lending its own money, but is lending with other people's money. and when they are trying to do that without offering the proper safeguards or disclosures to relevant stakeholders and investors. that is when red flags are raised. but this question goes to everyone on the panel. when think about how to protect residence at home. they're not going fully understand it. the possibility of libra failure. if anyone can explain the important institution if it is labeled as too big to fail how is this connected to what we are talking about now? >> and i just mention one thing that is buried in their white paper documents they're trying to negotiate to get accounts.
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an account at a central bank is quite different. the lender of last resort. i hope that chairman powell and others at the federal reserve would not give that to this association. if it was very large it would go to answer your question spygate is not possible. there are decisions made by good men and women, they made decisions it many of us say is not the right thing to bail. they're negotiating to get access to central bank money or accounts that is what would happen if it was systemic. >> there's another element that we are not focusing on which
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relates to everyone's constituents. what facebook wants is that transactions occur in libra. that they provide things in libra, when you have a borderless currency, you have a global market with no reasonable regulation. we are talking about providing financial services, all the problems we know with abusive lending, we have jurisdiction problems that have no plausible answer. >> i will also add that the disclosure aspect is very important as has been mentioned. libra represents an investment product that would be regulated. it is very important that people who receive libra are educated as to what they are receiving. financial education has been
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problematic in this country's history. the disclosure component is important in understanding the risks that are being taken when they choose to take their dollars and turn it into libra. >> i will put the questions into the record, one of the things i talked about is the monopoly. the small group that is being created the fact that they could vote in contrary to position by facebook. >> the gentleman from illinois is recognized for five minutes. >> thank you i like to think the panel for bearing with us. the question on banking commerce for mr. weissman.
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you mentioned that the arrangement may run afoul of the bank holding company's requirements. which enshrines a historic separation. the framework and our country is established law, the guiding principle that they should engage in partial credit helps guard against market manipulation, and anticompetitive behavior. when lines are blurred problems emerge. during the gilded age, j.p. morgan monopolized railroads and manipulated rates. in 2013, goldman sachs bought out a quarter of the aluminum market and use the ownership to inflate prices of aluminum costing consumers $5 billion.
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mr. weissman will you please share why this principle is so important? and what applications does libra have for the erosion of this principle ? >> your question illustrates many of the key examples. the problem is is that things get a lot of money and information. and they are incentivized to use their money and risky ways. capitalizing on special information that they have the other thing about facebook. it becomes a social media monopoly and a financial service provider. all the sudden there's going be a firewall. they can combine financial information with social media platforms. macon advertise based on what you are purchasing. they can go into business providing goods and services and give you discounts and libra. that's part of the plan.
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the possibility is for unjust competition and squeezing out any rival that is not part of the facebook system. the ability to manipulate and misuse information that they get from the financial side. if there are problems that do not lend themselves to regulatory solutions. there is a reason we have that wall, and we have paid that price. and we will certainly pay the price down the line. >> switching gears. there have been reports that president donald trump intends to nominate judy shelton to the board of governors. and she is in favor of private currencies. in the speech she made she proposed a new international monetary system. same that an
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approach that permits the virtual currency in tandem, with permission of currency commission should be put forward. if the federal reserve loses control over the money supply what challenges might that create? >> we have lost control of monetary policies and the influence of the economy. guaranteeing systemic risk. where you can have massive bailouts. and it will need a massive bailout from the public. >> i think the big coin in
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crypto movement has formed one thing. a private form of money. and it is putting competition on central banks around the globe to take their legacy payment systems and move it into the 21st century more fully. i say that there is a balance. they have created competition for public good. and into the second part of the question. some central banks like sweden are looking at issuing a digital currency. it would still be government currency, but the public would have direct access to reserves. and sweeney wouldn't just rely on the central banking. >> that's exactly the point. i think we should think about the form that is issued by a public agency like a central bank. >> thank you, i yield back. >> is there anyone else that seeks recognition? i think not.
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let me just say to the committee how grateful we are that you came today and spent the time, helping us to formulate questions in a way that you have shared information with us. we are very appreciative from both sides of the aisle. while we normally do not do this we give them another round of applause? thank you. [ applause ] >> thank you very much. we are going to take an action that we don't only take. i would yield five minutes to the ranking member for close. >> we are each
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getting five minutes, correct? just to be clear. $4 trillion. 3.8 $4 trillion. and we are talking about a private currency that has 2 billion users that could potentially use this product. i don't know how history is going to judge this here. i fear that it will not be judged well. there is a recklessness, and hyperventilation - - hyperventilation of facebook, we have seen the use of consumer data. we have seen how they responded. but there is something additional here, people fear something that they do not understand. facebook is using the language of crypto currency, a
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digital currency. they are using the words of launching technology, but what they have created is not either, they are creating something different. there is an underlying fear on the hill, because they don't understand that the currencies a digital asset, my fear is that this will not be wearing well historically, concerns have been raised, questions have been raised, and it is because politicians don't understand innovation, they want to kill it. we will have people on the hearing today, with the very quote that i was talking about, the hyperventilating - - the hyperventilating nature of the headlines around the project, more
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broadly, crypto currency. i opened with that. a member used the exact same quote is a knock against project libra. we had a member of the committee speak about this as a terrorist act. as one of the worst moments in history of the last generation, an attack on our country, likening project libra to that. i don't think that this will be worn well. there are legitimate concerns about this, many of them of substance that will well or well, there are massive forces at play, skepticism of facebook that is clear. and there are massive anticompetitive forces in play. if you want to lower the cost of payments, domestically and
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globally, you need innovation. it is absurdly high for someone to remit money back to their family back at home. absurdly high. we do not want terrorism financing. we want important protection. we want immigrants to be able to send money to their loved ones. or for someone to move money more regularly and more cheaply. we want those innovations and we need a new framework to do that. we have a technology here that is going to do that and there is a great opportunity to do that. we want to make sure that people are protected, in particular, consumers. you cannot knock every new innovation because it is a new idea. you cannot ban a new idea from even pursuing the regulatory framework from operating it is absurd and it is wrong. what i think this hearing does, and i think the discussion by our
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government around the project highlights the nature and utility of crypto currency, digital currencies. this includes bitcoin. and due to the nature of the technology of that coin, governments cannot kill at, nor should they. and you cannot kill digital currency broadly. they will be enduring and strong, a new framework of the next generation of the internet. that is clear. in a generation, i hope that there are statements here that will still be pointed to as factual and correct, about what we will live through in this iteration of financial technology. i hope that there will not be much left out in 30 years. my fear is that the reactionary element that was brought up here today, in part it will be dealt with, with great
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disdain. i do think, however, it was a really good hearing. we now have before congress a deeper understanding of these digital assets, and the breathtaking speed at which the world is changing and how we have to catch up. thank you for the opportunity to close, thank you for hosting today's hearing. >> thank you. allow me to begin my close with the fact that members did an extraordinary job today, both sides of the aisle came well prepared to ask significant questions, as a matter of fact, i believe that we had members on the committee today that have gone a lot deeper than many of those observing what took place today. they went deeper than what was
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expected of them. i am king of the interest, and we had some the members saying that this was the most significant hearing that we have had since the last election. this committee was reorganized, and i'm very pleased about that. i am so pleased about the panel that i've worked with here today. this is a panel that we absolutely needed. we do not know what it is. i first saw the paper unveiled and i almost went into a state of shock, i could not believe what i was seeing, that this massive effort was underway, and we did not know what it is, what it was, where it was going, how it was organized, all of that. so, i determined as chair of this committee that we were going to move on it, right away,
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that we were going to hold a hearing, that we were going to get involved in this and not wait until destruction takes place. you heard some members talk about this. the financial institutions have left us in the dust, and harm was done to our constituents and our communities, foreclosures took place and people had been involved, signing on the dotted line we don't intend for that to happen with this, we are going to put the time in on it and we will learn a lot more about who makes the money and how it is
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done. we have to find out what this is. the association is working as a nonprofit. no organization this big and powerful works as a nonprofit without making a lot of money. i am very appreciative of the fact that it has been represented, this is all about servicing the bank. sounds good. i am very appreciative of the fact that somehow libra is going to solve the problems of the dollar, because it is not functional. will the last time i had it in my pocket, it works very well. i am focused on it,
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we have members who are vitally interested in it and no matter how big and powerful facebook and those aligned with it are, and how they have advanced in ways that we have collected huge data and how they have used, sell, and plan to sell even more data, i think we sent a message to them today that we are focused, we are focused on watching, we are on it, we are involved in it, we are going to use all of our time learning everything that we can about it, and for those who say we have no appreciation for innovation, that is not true, we have an appreciation for innovation but not for those who have messed something is
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innovation that is an effort of control over crypto currency. again, i want to see thank you to both sides of the panel. i even think mr. marcus for coming. and for attempting to answer the questions that we were giving. he answered my questions and he did not answer the question about whether or not there should be a regulator of any kind, that could oversee this. a lot of the questions were spirited i am suggesting we get him here himself thank you very much
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for being. and let me just say that we have some information. submitting extraneous materials. we would like to have that included in the record. with that, this hearing is adjourned.
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testifying at the southern border our live coverage begins at 10:00 eastern here on c- span three here a reminder, you can also follow our coverage online c- span radio at. >> washington journal, news and that impact you. will release will speak about immigration policy and conditions at migrant detention centers. then temperature will talk about wednesday's houseboat to raise the federal minimum wage and the debate over government spending. watch washington journal on thursday morning the discussion.
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>> we found that public officials, people who really govern this country, congress, not the president, is your grandson you they right thousands of regulations and enforce the law, they don't think of ordinary americans much. >> the chair of environmental studies discusses his book, what washington gets wrong, and misconceptions about the american people. >> wheeler to congress to make the law, the president executes the law, the courts review the laws. that is not exactly how the system works. not of as the law, it is an regulation by your credit who are not elected by anyone, who often

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