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tv   Senate Banking Hearing on Facebook Digital Currency  CSPAN  July 22, 2019 1:32am-3:55am EDT

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about their expansive vision for the company. how big can the market opportunity be? this theately, why is right team to go after that? is a fun come intellectual process by which we get to learn all kinds of new and interesting things and then make a decision about whether this is a team we should back for this opportunity. at 8:00 p.m. on the communicators on c-span2. >> testimony from david marcus, facebook's digital currency cocreator on concerns over the company's new digital currency. he talked about money laundering schemes, and international violation sanctions. this runs to an half hours. [inaudible conversations]
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[gavel] >> this meeting will come to order. will come to order. today we will receive testimony from david marcus head of libra at facebook. on may 9 senator brown and i sent a letter shortly after it was reported that company was recruiting financial institutions and online merchants to launch a cryptocurrency based payment system using a social network. we asked space bar for more information how the system would work, access and use of consumer financial information and facebook's access to use of information on individuals or group of individuals for credit or insurance or housing i appreciate facebook's response last week.
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shortly after the letter was sent facebook formally announced its intention to launch the payment system libra and issued a white paper providing information on the project. since then us and global regulators have taken notice including the federal reserve, reserve, uk financial conduct authority and a stability board, g7 and others for the last week during the federal reserve's semiannual monetary policy report to congress chairman powell raised concerns of the potential to incite money laundering and financial stability problems and expressed concern over customers privacy. yesterday secretary - - t12 has very serious concerns libra could be misused brick of the bank of england governor said libra if it achieves the ambition would be
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systemically important and as such to have higher standards of regulation and consumer protection and address issues raising from anti- money laundering to data protection and operational resilience concerns include but not limited to how the payment system will work, managed and how libra association and facebook will all interact. what consumer protections will apply and what protections for consumers from fraud or failure and how individuals will be protected and how individuals privacy will be preserved. how the libra ecosystem interacts with the bank secrecy act and other regulations and in ways that libra could threaten financial stability and those preemptively to mitigate risk
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despite the uncertainty, facebook stated goals for the payment system are commendable and according to the world bank , one.7 billion adults remain unbaked and two thirds on a mobile phone or otherwise have access to the internet. if done right the efforts to leverage existing technology to make innovative improvements to traditional and nontraditional payment systems could deliver material benefits such as expanding f access for the under banked and providing cheaper and faster payments but still libra is based on a relatively new evolving technology it is not entirely clear how existing laws and regulations apply i am interested in its implications for the protection and privacy of individuals data. facebook has massive reach and
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influence within society with 2 billion active monthly users and access to vast amounts of personal information including those received from users and information derived from their behavior on and off facebook. libra will only expand this speech by increasing commerce on the facebook platforms. this raises several questions. the banking committee has held hearings on data privacy as it pertains to the european union general data protection regulation, data brokers and fair credit reporting act. giving a significant amount of user information held by the largest platforms on social media and the prospect to gain even more information , congress needs to give individuals real control over their data. europe has already done this by imposing obligations on
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companies to establish rights for individuals with respect to their data. we need to establish similar obligations for brokers and users and implement the enforcement system to ensure the collection process is not abused and data is adequately protected. individuals are the rightful owners of their data. they should be granted a certain set of privacy rights and the ability to protect those through informed consent including full disclosure of the data gathered and how it is used. regulations should be clear and understandable for collectors and consumers and should not punish those who opt out of those practices. individual should have the ability to review their data and correct inaccuracies with ample opportunity to opt out to be shared or sold for marketing or other purposes. chairman powell also said the privacy rules we apply to
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banks we have no authority to apply to facebook or libra and added we may even need to create a new regulator to address such issues because we determine the next steps, what is clear the importance of financial innovation happens here in america. in this way the libra announcement is high in the need for policy makers and regulators to establish clear rules of the road. during this hearing i look forward to hearing more about the facebook project, the steps it plans to take and has taken with regulators to ensure compliance and how it intends to assure individuals privacy is maintained and information protected. >> thank you mister chairman. facebook is dangerous. it may not intend to be dangerous but surely they don't respect the power of the
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technology they play with like a toddler who has got his hands on a book of matches facebook has burn down the house over and over and called arson a learning experience it has two competing missions make the world more open and connected, and make a lot of money as facebook attempts to serve both these missions they wreak havoc on the rest of us there are disruption of the newspaper industry they make it easier to share what you are reading with friends at the same time they have redirected most of the media industry's profits away from actual journalist into its own coffers and have done it without the benefit of re-creating a local news desk or conducting a hard-nosed journalism that keeps politicians and business as honest or even without meeting the most basic journalistic standards. this creative disruption doesn't create anything and
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look at the impact the way it connects people facebook and other tech companies to reflect what we already are but that's not true. to be profitable facebook can hold up a magnifying rather than a mere like i learned in boy scouts to use a magnifying glass to burn a hole in a piece of wood concentrating our focus on the most divisive issues pushing the most controversial to the top of the news feeds they play on people's fear and worst impulses but not based on any sort of fact. facebook does all it can to manipulate a choosers so it can direct our eyes to their ads and turn a bigger profit this is an exaggeration in fact they tested it they can manipulate our emotions with a
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psychological experiment more than half a million users to see if they could manipulate our moods and it turns out it can. that emotional manipulation has led to horrifying results but have to tell you what amplifying our divisions has discourse in our country not just between political parties between half of the people or even a family member on facebook or an old classmate. look around the world un report details on facebook was used to spread propaganda in the war relating to genocide more than 600 members of the people were killed more than 700,000 refugees had to flee the country i don't think for a minute that facebook created hate. but we know there are competing missions of connecting people and turning a profit create an algorithm
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and business model that intensified that progress hard to remember a world without facebook or a time we had to tell our kids be careful what you do on the internet because it will not go away. what happens online has consequences. that's why it's hard to understand why he facebook doesn't seem to comprehend and the intention out of a swiss bank account. and to say that facebook is a company but be elected mark zuckerberg with this utopian government wants to turn family and friends against each other rather than bring people together facebook has
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demonstrated with scandal after scandal to be treated like the profit-seeking corporation it is just like any other company they have proven over and over they don't understand the accountability they are not running a company but a laboratory no executive knowledge has been harmed by their experiments the look as where they run their social experiments on us. they move faster broker political discourse they move force with genocide and help to undermine democracy now they ask people to trust them with their hard earned paychecks it takes a breathtaking amount of arrogance to look at that track record to think what we really ought to do next let's
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run her own bank and for-profit version of the federal reserve for the rest of the world understand what that inequity and inequality in the country and given the fact so many have forgotten what happened ten years ago was tempting to think anyone could do a better job than the wall street megabanks but the last thing we need to do is concentrate even more power in huge concentration look at the record we be crazy to give them a chance to experiment people's bank accounts using tools they don't understand like monetary policy to jeopardize hard-working americans ability to provide for their families it is a recipe for more corporate power over markets and consumers fewer protections for my constituents. >> thank you senator brown you cannot proceed with your
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testimony. >> thank you chairman. chairman and ranking member brown and members of the committee thank you for the opportunity to appear today. i am david marcus i'm head during facebook i have been an entrepreneur aiming at improving people's lives. for many years my focus is financial services i became the president after i started my startup moved to feist facebook five years ago to run messenger now lead our efforts for good reason testimony i describe the mechanics of libra today i will explain why i am optimistic about what libra can offer the world. before i get there want to make clear we are only at the beginning of this journey. federal reserve chairman powell has said publicly you need to be patient and thorough rather than a sprint
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secretary - - teetwelve reinforce those views yesterday and we strongly agree with both of them we will take the time to get this right. we expect the review of libra to be the most extensive ever we are fully committed to working with regulators here and around the world and let me be clear and unambiguous facebook will not offer the libra digital currency until we are fully addressed concerns and received appropriate approvals for quite like to start by sharing the vision for libra it is intended to address an important problem imagine a daughter who wants to send money to her mom in another country of those $200.14 on average is lost in fees it can also take several days or weeks for the mother to receive the money and a delay that could be disastrous in an emergency. not to mention lines could be long or in high crime areas.
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doesn't have to be that way when it be easier and safer if people could securely receive the money transfer through their smart phone like they do so many others today. that is what libra is about to develop a safe and secure a low-cost way for people to efficiently move money around the world. to realize the promise facebook and 27 other organizations have founded the independent libra association including companies telecommunications block chain and venture capital industries like nonprofits and women's world banking who are here today along with staff from the libra association. they will govern the blotchy network to administer the reserve and establish the rules of the road to prioritize consumer protection and implement safeguards that require service providers to fight money laundering. we expect the safeguards will
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at least meet if not exceed existing standards and improve the integrity of the global financial system. when fully formed we expect libra association to include 100 diverse members and facebook will only have one vote and will not be in a position to control the association. nora will facebook position themselves to compete with other currencies or interfere with monetary policy brca1 fact the libra association will work with the federal reserve and other central banks to minimize the risk with their currency or interference with monetary policy this is the province of the central bank finally turning to the role to establish and realize the potential of libra to facilitate libra issues facebook has established a subsidiary offering one of many digital networks using that wallet consumers can save
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and spend right from their smart phone if successful facebook will benefit from more commerce over the family of apps it will be affordable and accessible and safe and secure with strong safeguards to protect users accounts and information we expect that wallet will be governed by rules and enforced by the ftc and others and regulated by state financial regulators. we are committed to protecting the privacy of customers and the wallet will not share individual customer data with the association or with facebook except for limited circumstances mike for prod one - - fraud or committing - - cooperate with the law and we are excited for the potential and proud to initiate this effort here in the united states provide believe the lead innovation of digital currency if we don't
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lead others well if our country fails to act we could soon see a digital currency controlled by others whose values are dramatically different from ours. i believe libra can have positive change for many people and provide an opportunity for leadership consistent with our shared values broker look forward to answering your questions. >> thank you very much. i will start off with the question that you anticipated that with regard to jurisdiction and the regulatory rules of the road. it seems to me digital technology innovation may be inevitable and could be beneficial. i also believe the united states should lead in developing with the rules of the road. you have already indicated your awareness of the secretary's remarks yesterday the statement that chairman powell gave and responses when he was here a week ago and
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other concerns raised by federal regulators. by setting up libra in geneva switzerland makes me wonder if the rules of the road and supervisory oversight is focused on the swiss financial market but you said it will not offer the digital currency until we have fully address the regulatory concerns and receive appropriate approvals. my first question is do you agree the united states should lead to establish the rules of the road over similar digital currency initiatives quick. >> chairman thank you for your question. yes. absolutely i agree the us should lead and i want to reaffirm that we chose switzerland not to evade any switzerland responsibilities
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of oversight but they have well established international with headquarters who and wto even the bank of international settlements and despite the fact it is headquartered in switzerland will still be registered with oversight with us regulators but i completely agree the us should be. >> i appreciate that. you have already indicated you can see in the united states you'll have to deal with sec, and some state regulators. i have been thinking about this question the united states approaches the regulation of data and data privacy with multiple regulators over different pieces of economic activity and other social activity.
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europe does this differently with the gd pr across sectors if you look at fsoc in the financial world the treasury, treasury, fdic, occ, cfpb and the f hfa have you analyzed in a sectorial approach which of these regulators would have a piece to create the rules of the road if the united states stays on this approach? >> this is not for me to say of it all i can say today as we are committed to working until we satisfy all the concerns and regulatory bar is met before we proceed. those that we are engaged with
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with the g7 working group with the central banks looking into libra and collaborative working with them was well. >> it seems to me it seems which agencies will take a claim of what is happening. but you will comply with all regulators quick. >> yes or. >> i have are questions i will have to submit after the hearing be told the banking committee that collects the information using for advertising and personalization briefly will you please describe the personal data collection from the platform transactions so will this information be
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collected for those transactions that use the libra wallet like when a product duct is bought on facebook will they allow other digital wallets to be used within his family of products? so just explain how that will work. >> chairman, one thing is important and i want to state this very clearly. we will compete with a number of other wallets that operate on top of the libra network that network is interoperable meaning wallets can send money from one wallet to another which is not possible with the current system and as a result to earn people's trust we will have to have the highest standards with privacy and the way we have built it is financial data or account data that is collected will
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actually be shared with facebook and the way we built this is to separate social
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will except 100% of your salary and other compensation in this facebook currency? senator, libra is not designed to compete with bank accounts. >> that is not the question. you want us to trust you so much. mr. marcus: senator, libra is
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not meant to compete with bank accounts. we will not pay interest. it is like digital cash. >> do you trust your currency so much that you and your team are willing to see 100% of your compensation be paid to you in that compensation? which it could be if you decided it would. mr. marcus: if your question is whether i would trust all of my assets and labor, the answer is yes. >> do you trust the sun to make your compensation paid fully in your currency? mr. marcus: i would because it is backed one for one with the reserve. senator, with respect, i wanted to clarify that we are not trying to compete with and deposits. >> let me finish. you said you are open to facebook about your company creating -- you said you are
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open to feedback about your company creating a new currency. i told you i think it is a bad idea. the republican chairman of this committee has raised concerns. the democratic chair maxine is demanding you give up on this project. the chairman of the federal reserve sat in front of this expressed numerous concerns. even the president of the united states has told facebook to back down. the manyntion international leaders that have raised serious alarm. elected anything that leaders and economic experts can say that will convince you and facebook that it should not launch this currency? of marcus: we agree with all the concerns, very legitimate concerns that were raised by secretary mnuchin and and many others. this is why we released our white paper so much ahead of any
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public launch. we wanted to ensure that we take the time to get this right and getting this right means addressing these concerns in full and ensuring there is proper regulatory oversight for this project. and we are fully committed to doing what it takes to get there. >> with all due respect, if all who have seen the collective amnesia of this congress in terms of what happened 10 years ago in my zip code in cleveland where there were more foreclosures than in any zip code in the united states a decade ago, if all of us find this to be a bad idea, and think you should not do this launch, are you still going to do it? mr. marcus: what i heard from chairman powell, from secretary was thatnd many others there were serious legitimate concerns that have arisen from again to i will commit do what it takes to address
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these concerns and if they are not addressed and if the regulatory oversight is not appropriate, then we will not fill it in. >> that speaks a lot, mr. chairman, to their accountability and trustworthiness. >> senator toomey. it strikes me as wildly premature for us to come to the conclusion that we have to act now to prevent what could be a very constructive innovation in financial services. i think there are tremendous potential benefits in block chain technology, and cryptocurrency's. i can imagine -- i think it is clear they could help us lower payment transaction costs. they could facilitate access to capital. provide pseudonymity and levels of security that other forms of currency have not. as a medium of exchange might be explained
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by thee -- partly volatility of these cryptocurrency's. here we have what strikes me as an interesting iteration may be including a mechanism to provide a diminished volatility with backing it with a basket of currencies. i just think we should be exploring this and considering the benefits as well as the risks and take a prudent approach. but to announce in advance that we have to strangle this baby in the crib i think is wildly premature. let me ask a question of mr. marcus about the ultimate motive of this. it seems to many of us that if this were to unfold as you have wasribed and if libra adopted widely, there would be very valuable data about payments. in your testimony, my understanding is that you have said it is your intention never that data without
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consent. is it the business model, the plan to at some point in the foreseeable future seat the consent of the participants so you would be able to commercialize the data somehow? no, that issenator, not the intention at all. the plan as far as facebook is thisrned to monetize initiative is to enable the 90 million small businesses that are currently on the facebook platform and the many users on the platform as well to engage in more commerce together. and if they engage in more commerce, there will be more advertising from the small businesses. that would be the first indirect effect of having this network be successful. and over time, what we hope is that through the wallet, we can
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offer more services and partnerships with existing banks and financial service companies to drive new revenue streams for the company. toomey: so you will never see the consent of the consumer to commercialize this? mr. marcus: i cannot think of any reason right now for us to do this. sen. toomey: my understanding is that the basket of currencies invested in very liquid, high quality assets used to provide the intrinsic value of this there would presumably be income from that. we have a lot of negative interest rates around the world but let us assume we have more positive than negative, that generate a revenue stream and i think from your testimony, the intent is to use that to cover various costs. at some point, that could become
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very substantial. i saw a reference to paying out dividends to the original investors but this is also described as a not-for-profit. so it strikes me as odd that a not-for-profit -- not-for-profit which would generate profit and distribute it. that sounds like for-profit. one idea would be to pay reflects in libra to the income from the underlying assets. could you explain how paying unlimited devin's is not a -- dividends is not a for-profit --? mr. marcus: libra does not pay interest because it is like cash and will mainly be used as a payment instruments. as far as the interest and the not-for-profit question goes, the way this is structured is that it will have some income
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that is targeted towards paying the operating costs of the association and potentially all ofng some return to the organizations that will invest in the ecosystem to make it happen. but the plan is not for this toome to be unlimited and have all of the income going back to investors. obviously, we will need to find a way over time to create new pools of incentives that go back to people and businesses using the libra network. and this is part of the conversation we are notably having on how to manage the reserve and the returns and how to have appropriate oversight on the reserves with this working group that the g7 organized with central banks, finance ministries and the nsb. i believe the reserve will
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require very specific oversight and regulatory framework in order to ensure proper management. proper : i have some consumer security in cryptocurrency's like bitcoin transactions. that coin is final if somebody is hacked or steals there is not much they can do about it but if somebody steals funds from a bank account or makes fraudulent charges on a credit card, the consumer is almost made whole by the institution how will libra handle that quick. >> i can speak the wallet will
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offer consumer protection against fraud and account recovery the same way the leading wallets today out there provide protection. >> in a situation where fraudulent charge has been made with my account, you are saying they will make the consumer whole? is that immediate? it is not immediate. is that without question clicks so if i pull out my drivers license and the credit card falls on the ground that is my fault the bank makes it fine. but the question is is it immediate in your case quick. >> senator we will do our best
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to resolve those types of issues and claims as fast as possible we are investing heavily in 24/7 live customer support to ensure we can resolve those issues. >> it is critical that is resolved before it goes live. as i deposit the money into a bank i am very confident i can withdraw from the bank. my grandfather was not that way. that's why even on these homesteads you'll find a glass jar full of money because they didn't trust the bank only when we got deposit insurance that the banks got the faith. let faith do we have in libra quick. >> thank you for your question libra will be backed one / one it is never a fractional reserve and it is designed to
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be stable and retain its value. >> in 2008 there was a run on the banks with big companies that went belly up in 157 banks, while moo, lehman brothers and others. nobody anticipated a run like there was. nobody. how can you assure us and still feel confident my many was safe in my bank. how do you make those assurances when we talk about a for-profit entity you're not doing this just for the fun of it how can we be assured the money will be there quick. >> senator when it comes to libra because the reserve is not fractional the issue we have had in the event that you highlighted they didn't have
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the appropriate reserves but we also want the appropriate regulatory oversight that anybody has the ability to understand how big the reserve is and how many libra coins are in circulation at any given point in time but to be rest assured the value they heard on --dash they hold is backed. >> when we met last week, by the way the reserve question has to be answered and something that is not up to you to determine what that reserve is. when times get tough, stuff happens. there has to be that kind of reliability there no different situation than the thirties because you are big enough.
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there has been a lot of comments about facebook today and what has happened that hasn't been meritorious and i'm being generous. it is true. and it has to do with bad actors people on facebook doing stuff all the time that have a different agenda from mom and dad and apple pie so how we prevent bad actors from using the application? past performance with facebook has not been very aggressive let the money come in and we will worry about it later in his head pretty negative impacts worldwide how we prevent bad actors from using this and then i will shut up. >> senator when anyone opens the libra account you have to open a separate account you cannot just use your facebook
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account, you have to authenticate to upload your government issued identification so we will have real identity of the wallet and systems and authenticated teams to prevent fraudulent activity and requirements for money laundering and counterterrorism funding. >> this is a huge issue that would benefit this effort doing exactly what you said. thank you and i thank you for being here. so to associate myself with some of those comments it is a good idea to explore because quite honestly cryptocurrency is a wild west not very well regulated and there are a number of examples i'm aware of where consumers lost everything with their engagement with better known
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cryptocurrencies out there program trying to understand the distinction if you have a transaction processing platform that several people have agreed to enter a consortium, you are not creating something at the expense of the card companies or other wallet platforms on the internet i assume they are trusted payment platforms quick. >> yes senator i want to stress visa and mastercard are taking this journey with us as well as paypal and coin base and other wallets. but i want to stress you don't have to become a member to use libra as a form of payment. >> that is what i was trying to get at the distinction between the currency and the underlying infrastructure you are providin providing.
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>> that is correct what type of capital investment are you projecting i assume you have a pretty exhaustive implementation plan in place what are you looking at with the underlying infrastructure quick. >> i think that is one of the reasons facebook is inappropriate sponsor because we have the resources to innovate we are ready to put those resources to build valuable tools. we haven't determined exactly how much we will invest. it is a process. >> it is a consortium. >> yes. every member will have an opportunity to invest and participate in funding the network. >> that would be very helpful to the committee to get a
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briefing that you will not hold deposits i understand what you are doing with the reserve for transactions but i think it would be very helpful for the committee and staff to understand so what i have been able to study is extremely limited and then to understand what parts are subject to regulatory oversight for quite you want to express a concern we had a committee hearing at judiciary last week talking how social media platforms have been hijacked by criminal organizations. and i'll think anybody was implement it for that purpose that people are smart and devious so now you are looking at all the ways your payment
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platform like all the others could be exploited for criminal activity that's why a briefing on the full architecture and timeline or your own suggestion over the toy oversight is important we need to get that information to the committee for those who are interested. i believe the united states can follow or we can lead and i believe the same way with the gold standard for banking system in the united states we have an opportunity to set the international standard that ultimately provide greater consumer protection for other upstart equivalents not compared to what you are doing but i do have concerns about
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privacy and potential exploitation but i believe the united states and our regulatory environment and the consortium is well-funded is more likely to produce a gold standard to drive down the cost of transactions and actually providing better value from that piece they are paying today look forward to this. thank you. >> good to see you mister marcus. motivation and i'm achieved by a block chain and technology but i share the concerns of my colleagues with the enterprise as yours as we look back during the antitrust investigation of microsoft the justice department found the key strategy i call it catch
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and kill with other emerging technologies that could be disrupting so now we move into block chain with the ability to be disruptive so what about those efforts with libra catch and kill? but the way the early technology for libra to put the best engineering talent with that libra network and as a result it doesn't belong to us anymore it now belongs to the community and we will
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relinquish our control. >> so let me follow up. facebook will not have incentives with that money making venture. and to prohibit for those users. >> i would even go further and then. >> but the question is you didn't answer the chairman's question how do you know those existing global platforms like messenger will support
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third-party cracks will you at least clarify the question to say messenger will support third-party wallets? >> yes or no. >> and want to clarify. >> you didn't answer chairman crapo please answer. >> the network is interoperable those are using the libra network can send and receive from other wallets. >> so if a user wishes to use a wallet other than libra can you make it easy for the financial data for now i want to go to another wallet will you make it easy for them to move their data and financial information to the
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third-party? >> absolutely. >> see you have agreed on data portability the potential interoperability with these wallet so my hope is you have the same approach when i lay out legislative for data portability on existing platform use so that will extend your current applications as well. >> i cannot commit to other parts of the country. >> it would be really great if you can make that same commitment on the facebook basic products you have to that data portability that you are on the record there is no barriers in place. >> we believe this is primordial to move from wallet
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to wallet that they are good competitive dynamics so i come back to the chairman's question about the globally dominant platform in terms of what happens on messenger they will support third-party wallets. >> i want to clarify. >> every time you start with i want to clarify it gives me pause. we have asked the question it seems pretty simple with messenger will they support third-party wallets or have incentives to push people to use that product mr. gensler mine - - calibra? >> this is a nuanced answer if your question is we will
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invent other wallets inside of messenger the answer is no but if you are asking if other wallets will have full interoperability that you don't have to use that to send or receive money then the answer is yes that is different than putting preferential treatment i did not get to the question around third-party developers having concerns getting access but i think your questions is one of the reasons we need to take a great deal of time. thank you. >> thank you mister chairman. mister marcus thank you for appearing before us today i just want to take a moment with the division of banking for their forward thinking and allowing us to have innovation in the currency space.
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anchorage just received permission to have a south dakota chartered trust company things to the friendly climate in my state and has chosen to open the second headquarters in sioux falls south dakota the significance of this is far beyond the borders as a model how they can study and learn about digital currencies while allowing to innovate and try out products and services i want to congratulate anchorage and south dakota. i had an opportunity to travel to africa with very small amounts of value within their own currency but on a day to day basis there are millions of people with very small incremental items on a
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day-to-day basis. they don't have any type of a product that works well. so can you talk about what you see in other countries for this type of a platform to allow a very simple way to transact for value received for currency our products in exchange without the high cost of doing so? i have not heard that discussed today. >> i appreciate your question. the way anybody will use libra or the wallet of their choice will install a small app with the basic data plan and from that point on to have the ability to move from the cash economy to the digital economy
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and the ability to transact that only domestically but benefit from services that will be built on the libra network and as a result this is our mission and massively lower cost for those that need it the most and also to lower access to capital with three or low cost money movement to access to capital and the barriers would be low as well. >> i thank you will have a lot of competition i think a lot of organizations understand this is the wave of the future.
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so how is that allowed on your platform and that is an item of discussion for some time to come. but also the regulatory laid out - - lay out the you have chosen to set up in switzerland what does switzerland offer that the united states does not? what is it about our regulatory framework that puts us at a disadvantage? but the choice of switzerland is not to evade responsibility or regulatory oversight but we believe the global currency that is used by people around the world would benefit in a place that is home of many respected international organizations and that is where we came from. but the reality is with the current composition of the libra association members and
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calibra is the american subsidiary with a large company operating in the us and i think the beneficiaries of the libra network would be american companies without proper regulatory oversight in the us. >> i think the proposal and the challenges for the exchange for services has lots of obstacles to overcome of privacy and we will look forward to observing because i really do think it's a wave of the future and we will either be responding to it are
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actively involved in learning from it. >> thank you very much we appreciate you being here and answering questions. this is obviously very innovative but i do have a couple of questions with the concerns that we have and as attorney general in the state of nevada is money laundering i know there is clear oversight we have right now to address the issues of money laundering but one is terrorist financing so my question is how will the libra association be sharing or guarding against any type of money laundering activities?
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have you thought about that? be mckesson i care about this deeply and personally the way we think about protecting the network and terrorism funding not only moving cash transactions in the digital world and if they move to digital it will be label and with the program as the calibra wallet is concerned for every new calibra account open there is a government issued identification and authenticate so as far as the libra network is concerned
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despite the fact the libra association is based in switzerland it will register with fin straw and have to comply with aml. >> dad is my next question will it fall under the bank secrecy act. >> it will not actually it will just organize. >> was about the bank secrecy act so those that are operating under the jurisdiction and with those programs and we are engaged with treasury that the set up of the network is not only to take a step back but improve
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that because of the way we are implementing the network. >> see you can sign up you address many laundering issues? i appreciate you providing more transparency around that. this is a new day and age when it comes to cash carrying around a briefcase through cash people don't do that anymore what you are creating is an opportunity for them to engage with criminal activity so to say we are complying with aml activities is one thing i want to see the specifics so i appreciate your willingness but another one that has come up is sanctions
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laws. the head of policy communication has asked how libra would react with the libra association in order to comply with the sanctions laws. the response the association won't interact with any jurisdiction that will leave that to the entities that have an on and off ramp to the currency. can you clarify? how are we supposed to address one - - address this issue with sanctions laws quick. >> this is a question we are engaged with the treasury department. the one thing we estimated as we will respect the travel rule and as a result perform the right checks. as a result perform the righ
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. . . . those who are subject will of course perform those functions. >> i know my time is up. if i have further questions i will some of those for the record. >> senator kennedy. >> i'm going to move fast i apologize and if advance to find her p. i will agree with the comments that senator may. we need to encourage innovation. i want to explore the underpinnings of labor. can we agree that a bigger a bir
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should be honest. >> yesterday. >> a banker should respect to customers privacy. >> yes of course, you're not going to engage and begin. >> can we agree that facebook knew in the spring of 2060 that russia was attempting to facebook to disrupt the u.s. presidential election? >> senator with regards to this event we moved to slow -- >> isn't it true that the general counsel and the chief security officer knew in the spring of 2016, isn't it true that mr. zuckerberg and your cfo new in december of 2016. is it also true that you did not
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tell the board of directors until 2017, until september 2017. isn't that accurate? >> we definitely move to slow to recognize the activities that were happening on the platform -- >> excuse me for interrupting our only have five minutes. >> in september of 2017 when senior management told the board of directors, facebook also issued a statement. it said the russians have tried to disrupt the election, through facebook but they only spent $100,000 and the only ran 3000 ads. that was a life was in ? >> i'm sorry senator -- >> that was a lie wasn't it? >> i do not believe it was. >> later facebook committed that the russian ads had reached 126 million people didn't they?
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>> i believe the people who answer the question at the time answer to the best of their knowledge at the time. >> when mr. zuckerberg was conducting his listing across the whole country, the first half of 2017, he was feeding cows in wisconsin and having inner with refugees in minneapolis. he knew about the russian involvement didn't he? >> i do not know senator. >> he did not say anything did he? >> i do not remember the timely. >> in the spring of 2017, spring and summer our intelligence committee and the u.s. senate started investigating the russian attempts to disrupt the election through facebook. facebook issued a statement saying there was no such attempts. that was a lie wasn't it?
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>> i do not remember the timeline and i believe people have always answered truthfully with the information that they had at the time. >> in june of 2018, we found out that facebook was sharing using daddy with device makers. 40 of them. amazon, microsoft, samsung, facebook did not disclose that to the user did it? >> my understanding and again, it was not my responsibility or my team that this was designed to enable the phone manufacturers for integration within the facebook products to service those consumers using devices. >> your algorithms is sucked if i watch a video on a topic i'm immediately shown a video on more extreme versions of the topic? is that correct? is. >> this is not the way that the
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facebook platform operates today. >> it did for a long time right? >> mark zuckerberg led through the change -- >> let's agree on this, facebook has become the major new source for many, many people, the major new source is that true? >> i don't believe it is. i believe more and more people are interacting -- >> 50% of their users say they get their news as a primary source on facebook. is isn't true that facebook has chosen to advance a set of values in which truthful reporting has been displaced by flagrant bull [bleep]
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>> i can't answer the question. >> i have great respect for facebook. but facebook wants to control the money supply. what could possibly go wrong. >> senator, we will not control the currency or the association and we agree that no company should control such a net worth digital currency. >> i would like a second round if we could. >> if we have time i will be glad to do that for senators who wish. >> senator smith. >> thank you very much. welcome. i have a lot of questions about this. you understand the level of skepticism that you see and appreciate you being here to answer questions. i want to understand a little better the association. they have you think about 100
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family members who will make decisions about investment strategy and regulatory compliance and social impact gold. who is in charge ? >> senator, the way that the govern of the association works is you will have the council of 100 or more members that will make decisions and will elect the board that will be between five to 19 members in the board will then elect a managing director in the association will have a staff to perform the governance function that it's supposed to look after. >> in the united states senate we have 100 members and it's clear who's in charge, mitch mcconnell. i am trying to understand --
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[laughter] i am trying to understand -- you described a consensus, will decisions be made on a consensus basis? i understand there's a two thirds majority but help me understand how decisions get made? >> the decisions are basically the structure of governance is one where there are certain things that should be really hard to change and those are important things to the spirit of how the network is supposed to operate in the spirit in which the reserve is supposed to operate and i believe when it comes to the reserve we will need appropriate regulatory oversight. >> would there be a constitution or a body of rules that would be agree to ahead of time that would dice the decision-making? >> yes or in public.
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>> how do you parse out majority rates? >> as it stands the way it is starting, every member, if we have a hundred members, it will have an equal voice at the council. >> what if there is a disagreement in minority automatically overwhelmed by the majority? >> it will depend on the decision, not all will need majority to reach a consensus. >> it seems possible on any board they develop coalitions and it seems a big question about how every voice will be heard in this incredibly powerful association headquartered in switzerland. is this board like a corporate board, what if there was conflict of interest the develop. >> we hope we will avoid, looks of interest but again we have a
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lot of work to do. this is why we should the white paper early on to get the feedback and input into sure we can adjust all the concerns and get proper regulatory oversight. and part of that is going to be governance of the association. >> i think these are important questions. we are mentioning association headquartered in switzerland would have amazing power over the financial health of this country over my constituents, i think these questions of accountability are extremely important. let me switch topics. what is a long-term business opportunity for facebook your. >> to business opportunities, one is really the ability for the 90 million small businesses and users on the platform who
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interact with one another. so more commerce on the facebook platform and if there is more commerce there will be more advertising revenue for facebook. that is one indirect effect. >> more commercial activity on facebook equals or money for facebook. >> yes senator. the other part of it, if we earn people's trust and they decide to use it over time we can offer and partnerships with financial institutions and banks and other services that will be new sources of revenue. >> so getting a bigger market share. >> i'm out of time but it seems that facebook is really good at figuring out how to monetize
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people's personal data, not only the data they get directly but the ambient data facebook collects to the many, many millions of activities that we do every year, for facebook to do that is capitalizing on the data and i have to say i am not reassured by your statements that you cannot see any reason right now why there would not be data sharing between the pop forms. >> i do not trust facebook. it is because of the repeated violations of youth the user privacy. repeated deceit and i am not alone. as you know, in 2011 there was a consent decree with the federal trade commission related to the privacy practices so that is where it started with investigative bodies. it has not ended even after
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that. facebook is under investigation again. approved a fine of $5 billion just recently. because of the repeated violations of your users information. for example, without users permission sharing personal profile information without software developers, selling it off again. data breaches, allegations that you repeatedly change due to privacy settings without notice. the sec of course is also investigating events around personal information from facebook. the new york state office of attorney general has an investigation to unauthorized collection of 1.5 million facebook users, e-mail, databases, on and on. there's allegation of bugs,
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sorry we did not mean to allow them to download photos. it is one after another after another. i do not trust you guys. instead of cleaning up your house now your launching into another business model with culebra and you have documents that talk about privacy commitment. in the privacy commitment you say you will not be sharing account information or financial data with facebook or any third party that customer consent. how do we know this is getting changed and how do we know you will do that based on your track record of failing and violating and deceiving in the past? >> that is a fair question. i want to enter into parts. the first we have been working really hard addressing the issues. we have invested incredible
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resources and privacy and mark has made it atop rudy and we will continue to do that until the issues are fully resolved and addressed to satisfaction. on the lever side, we have designed this network in a way that facebook does not and will uphold the currency. there will be plenty of competition and i want to take a moment to explain why there will be a lot of competition. first, regardless of the wallet we choose, you will be able to pay across which is currently -- >> i do not want to get into the spirit of talking about trust issues. he violated privacy in the past of a company, you continue to have issues and continue to change the privacy and rules without informing users, yet your launching a new product and claiming the privacy will be protected. how are users to no that is also
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not going to change and they will not be violated. that is what i'm getting at. the core issues trust. >> the point is people could get all the benefits from this without choosing wallet and i know we will have to earn people's trust for very long period of time. in order to get the benefit of them wanting to use the wallet of any other wallet, they will have a choice. >> let me follow-up, your privacy document says it'll be transparent and choices and control and easy to find privacy control the details what that is and for what purposes. you are telling me and i think the user not be able to have consent as to the data being collected. >> i do not understand the question. >> for culebra you say in your
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privacy document it will be easy to understand what data is being collected. will the user have consent for their data being collected when using this. >> yes senator. >> do they have consent in order to use claybrook? >> yes senator. >> so there's really no choice. in order to use it your data has to be proactive. there's no option to opt out. >> if you want to use the wallet you will have to authenticate and upload a government issued id and as consumers do not want this to collected in the very first step will not be able to use the service because we will be compliant to regulations. >> what is the business model of culebra, the interface of facebook and more people using
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it and more people stain on facebook and you can continue to collect information and selloff information. is that the business model? how will they make money? with respect, that is not what i said. >> but that section will happen. >> i will focus on the specific question yes. we have 90 million businesses, many that grow thanks to the facebook advertising platform. they're able to reach consumers, higher and we believe if they have the ability to sell to more constituent across the facebook popper and more people have access to the services and products of the 19 million businesses there more converse -- >> i know i am over time, and that was extremely sarcastic. [laughter] >> thank you for a witness for being here.
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arizonans have heard a lot of promises from facebook over the years about privacy. for example, facebook promised whatsapp it would not scrape the message data to deliver targeted ads for two years later facebook broke its promise and monetize personal message data. real doubts about facebook commitment privacy arizonans are skeptical about the repose currency. the goal is to reach the un- banked in under banked. but the important to remember that those who have not utilized bigger credit cards will be more successful to scammers. your head of product kevin neil that there are no plans to take a role in actively betting developers of wallet exchanges or other related apps. failing would expose arizona scammers. you stand by his statement? >> first i want to correct
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something which whatsapp is fully encrypted and facebook does not have access. to answer your question which is very important. i would say two things, one, while the libra association will not get the work developers developing we will need an association to find the right approach to ensure publishing services on the network has controls. and one thing i want to say as well, initial literacy is important. i believe the association there will be grants and investments made into financial literacy and the wallet that his concern and not only will we have consumer protection but it will protect your constituents if they have a fraud issue but we will make sure there is appropriate education in the products from the get-go. >> that was very helpful information.
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but that does not address my concern. if their goal is to reach a population that are vulnerable to abuse. arizonans will be more likely choosing libra which could jeopardize the savings and financial security. while were on the subject of scams, here is the hypothetical scenario. let's say enough developers faced impact skin utilizes an exchange based in thailand to ripoff in arizona who is using the wallet builds pain. so they steal all of the libra. that is met by an association based in switzerland. which law enforcement or governmental agency and which country does arizona call to seek cues or her legal and financial recourse in the situation. >> the answer is, your constituents will likely use an american us-based wallet
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provider that will have consumer protection and will make your constituents will if a wallet in spain, will they still have access to recourse for legal and financial problems? >> senator, it will depend on the consumer protection. the same way today you have different consumer protection and services offered by different financial institutions and others. i believe it will be the role of the libra association to ensure this proper consumers can make informed choices. >> the point, despite, this is a difficult question to answer. he processed they would use an american wallet. if they were using a wallet from another country back obligates
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the answer for this is a challenge and arizonans deserve answers. i have national security concerns. if i grant immunity. they are not the first choice of drug cartel in human traffickers because crypto currency is not easy to use. libra is not crypto currency, it's a digital currency that promises an amenity. which raises concern about its potential expectation for purposes per i'm concerned drug cartel at the arizona border region trying to finance operations along southern border. your testimony says you comply with the rules of the office of foreign assets control. but if one distinction person attempts to complete a transaction using libra, would you comply with the policy or would you allow a drug cartel transaction to be added?
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>> senator, first of all it is not an ominous so it will have a program and as far as the wall is concerned it is a result it will be very difficult to conduct on this network and you have my commitment that we will take the time before launch to ensure the network and the proper measures are taken to avoid the network to other designs it was meant for. >> folks in my state are concerned and we need better answers. i look forward to working with you. >> thank you for your appearance and testimony. your ceo and testimony for congress refer to silicon valley as a left-wing place. that is so many why so many rate
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versus half summary concerns on facebook and twitter and google. i worry about the possibility that a digital wallet and digital currency like libra could extend that into the payment system. there is reason to worry about that. democrat members have made it a habit by contacting institutions in a region not to do business with gun manufacturers. or with government contractors who serve ice or custom and border patrol. what safeguards if any will libra have to ensure that you create people with views that might be disfavored in extremely left-wing place like silicon valley. >> i appreciate your question. you are right. silicon valley tends to have a biased but i want to reaffirm the facebook is a technology company where ideas across the spectrum are welcome and treated
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equally. as far as this concern, we want to ensure people, as long as they have a legitimately use of the product can do what they want with their money. of course restrictions and products but we will be thoughtful in writing those policies and will be happy to follow up when we get closer to finalizing. >> sound like a safeguard to me. before you come into pressure from democrats, wait till tomorrow to go before the house financial service. if you think democrats on this committee have counted banks, wait until you see what you are in four over there. how do we meet someone who wants to sell firearms or neighbor
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wants to sell shotguns in his neighbor. or christian baker wants to practice when he makes his kick. someone was to pay a subscription to the trademark instead of your time. what confidence who have center radios have libra available to them on an equal basis as those who want to shut down gun retail or oil pipeline or government contractors who are working with emigration and customs enforcement. >> firearms are regulated product and already regulated and treated on the face of the platform. i know it's a couple gated issue and when it comes to writing this policy, i'm committing we will be very thoughtful and i have to say as far as i'm concerned personally i believe we should only get in the way and very exceptional cases and
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by being thoughtful of getting in the way of people doing what they want with their money as long as it's awful. we need to be thoughtful on how ready the policy. >> figure for the commitment. i hope we have transferred to. i assure you you will be getting letters from the outside. to say nothing about the health financial democrats. just like all the major banks have been getting those letters. after that matter, your own workforce will bring that pressure to bear. let's shift gears in the time i have left. money laundering is a big problem. it is typically done by individuals engaged in criminal activity like drug trafficking, human trafficking and so forth. also questioning sanctions. one of the world currencies we have the ability to impose extremely effective worldwide sanctions. most of all transactions are dealt with in dollars worldwide.
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can you talk a little bit about how libra would have an impact on the united states dollar and the united states government to impose sanctions. this is different from money laundering. specifically to try to avoid sanctions. >> i'm glad you brought this up. i believe if we don't leave them to space others will. the same way we will end up having to internet and two infrastructures. we will have two different financial systems into different financial networks. one will be out of reach that is so effective in enforcing the foreign policy and preserving national security. this is why i believe that libra is an alternative that consumers will have the ability to use
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with wallet that will enforce the sanctions that are led by our national security apparatus and treasury. ... >> so you are working on those problems but they're not fixed yet quick.
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>>. >> but some of those issues foreign interference, privacy, extremism . >> for instance senator the issue that happened back in the day. >> not making significant progress have you fix them quick. >> they will always require a great deal of work. >> if were having a conversation what do you say to someone maybe before you do a new thing and enormously important make sure you have your own shop fix. >> i believe that is the status quo that is a huge
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burden on so many people around the world to make your making an argument for cryptocurrency generally for this proposition but i have a question that facebook has a lot of problems. you have had a rough couple of years. so why are you moving on to a new and challenging thing other than the grandiosity of silicon valley that causes you to get bored with yourself with a new line of business not to eliminate credit card fees but the question is why facebook and why before you fix your other stuff quick. >> it's important to innovate in the same way we can bring communication prices down with our messaging app now anybody with a 40-dollar smartphone people can communicate we will
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continue to innovate with the people that we serve we hope we can do the same thing for them with access. >> you have expertise with regulations to protect financial information and money-laundering and other violations of consumer financial laws. >> not you personally but facebook now it does. >> within facebook or the consortium calibra is the subsidiary with the proper know-how. >> does your consortium have bylaws quick. >> the charter of the association is in the process to be ratified by its members
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and will be made public. >> when we launched website and white paper and we have guidelines the reason we didn't want all the other members to sign the existing charter we want them to take place and those are made with the others. >> so what i'm hearing and they have lots of questions similar of what is offered on the dais may have great reservations but that i want to be left out because of the market power. not just the one that i asked earlier and on the face of it
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but how do you answer the question about size and power and a lot of people already think facebook is too big and powerful and now you get into currency quirks how to address the question. >> the very set up that we have of the libra association that only way it's governed and with other companies that are already operating with companies like paypal and others. >> i appreciate this but with the most basic question is why in the world should facebook of all companies, the last couple of years do this
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quick. >> because we have the ability and the means to innovate on behalf of the people that we serve. >> to help the very people. >> because of your size cracks. >> and then because you are so big you should get bigger cracks that's not the point i was making. >> thank you mister chairman. i want to talk about money-laundering issues and the concerns and i understand that calibra is verified to those kinds of things but for money-laundering purposes a
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worldwide issue of partners all over the world how do you get your partners to verify the third-party products and how we prevent this money-laundering quirks this is a major concern how do you deal with your partners quick. >> first i want to commit we will not launch until we satisfy those concerns with treasury and other regulators around the world but more practically the way the network is operating that all the on and off rims would be regulated with aml as a result these as money-laundering to have an opportunity to be monitored and the intention is really not for these programs to take a setback for quite
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the opposite that we can help the efficacy of the programs and will work hard to make that happen because something i care deeply about. >> because we've seen facebook run into problems time and time again and senator brown's commented is another learning experience if things continue and if all of a sudden we continue to see criminal activity and money-laundering the innovator prosecutor will look across the table that you sir are contributing to this are you prepared for that down the road if you do your job to facilitate human trafficking, drugs are you prepared for facebook and all calibra users as criminal
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defendants crack. >> to take the amount of time to be insured to approve on the efficacy of the programs we really don't want this creation for these types of activities and why before launching we take so much time with our plans early on. >> i don't mean to imply that but i also know there are unintended consequences at some point somebody has to step up but thank you for that. but to talk about briefly taxes and to treat digital currency that every single transaction or a purchase made with libra it is taxable. so many businesses in the
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current space now help customers comply with tax laws with the irs in the consumer the way stockbrokers so does facebook planning on recording and reporting for consumers to fulfill these requirements crack. >> this is an important issue and this is twofold that unlike other digital currencies out there is not tied to the dollar so as a result the variation it will be very minimal. and then without the hassle
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without having to record all transactions. >> i understand you say you provide that to the customer but meant to provide that to the irs cracks you just put the burden on the consumer and the custome customer. >> my understanding this is the decision in the hands of the irs that they require consumers to report but we would be happy to work with the irs to make it better to reach for other digital currencies.
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>> the money-laundering aspect and that will take some time but thank you for that for your testimony. >> facebook ceo said move fast and great things. i only have five minutes which is not nearly enough time for the things that facebook as broken but the underlying theme is this does not think through the consequences of its actions of two.4 billion active users when facebook break something there is a consequence. so basically the theme of your response on data privacy is trust us. but that is something you earn and facebook has not earned
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that. is not that you keep the calibra separate i want to know how exactly you keep it separate from your social media data. >> but in the case one - - in the case of libra i want to reiterate my commitments and as a currency of the platform. >> just answer my question right now how specifically are you going to keep that cracks the way we keep calibra data as separate within the infrastructure we have separated with the facebook
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data so it does not be co- mingled with the rest of the data. >> even though your user agreement you say you will share the aggregate data with facebook crack. >> that is what we use is non- identifiable data that is the beginning of opening the door so .co meaningful line - - careening one - - coming all the data and that they will notify users and first and foremost i want to make sure it never happens where you commit if i that these is in the public within 48 hours and
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within a reasonable time frame. >> that can meet a bunch of things that we have leveled against rogue regimes and venezuela and cuba to make sure how they can use eva taxes last year the treasury department for the first time identified those associated with two iranian based individuals to help exchange bit coin for cybercriminals to extort millions of dollars from over 200 victims if libra is used without association that validates freeze the
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assets of such sanctions that if we don't need others will. and on the network of no jurisdiction and to exert any national security purpose. as far as libra is concerned naturally despite the fact it will be registered and will collaborate and to ensure the on and off ramps are properly regulated in those types of activity should be extremely hard. >> that the core question to have added in - - individual identified would you freeze the assets quick. >> the way this would happen
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with the currency is contemplated would be the role of the custodial wallets operating on top of the libra network to block access for funds as well as the on and off ramps to present those addresse addresses. >> i have a bunch of questions i will submit them for the record. this does not assuage my concerns with what we have worked on a bipartisan basis. so what read the libra association do if regulators want to enforce sanctions on certain individuals but rather global regulators do not ask how do they determine which said of rules apply crack. >> senator that is a good question and one that we are
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in active discussions with regulators including treasury. my understanding the way we are currently thinking about this is that actually the way to properly police and control the network is through the on and off ramps into - - and it to. >> i will take your word you will not act before this resolved otherwise this could be the wild west cryptocurrency and those seeking to avoid us sanctions. we just cannot have that. >> i agree. >>. >> as sanity want us senator
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kennedy with the 2016 elections i wish united states congress and the bipartisan bill that would say to putin or anybody else and to pay certain and high price. i hope that we should be working to protect elections on 2020 and have the means to do that. and second i heard a hint of the whole idea that facebook and other social media companies are conspiring against right-wing voices and four days ago we had the social media summit at the
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white house where he summoned most right wing social media voices and how this idea that the president's own twitter account was somehow being blocked but yet within the last 48 hours we have seen what a lie that was a president just spewed all sort of racist comments over the last 48 hours. it does highlight the challenge of social media companies have to try to make sure they monitor community standards to prevent the incendiary comments that can cause harm or danger at the same time allow freedom of voices on the internet. so i hope we get away from this nonsense we often hear from the president and others about this biased censorship
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and i hope we have more voices exercising their first amendment rights to speak out against the presidents racist comments. third. real-time payments. i'm looking forward to enjoy this discussion every time the chairman of the federal reserve comes before this committee i ask why the united states government is so far behind our european partners with real-time payments. the fact we don't have a system that can clear real-time payments today cost millions of americans millions of dollars. they should accelerate their efforts in getting done i don't think we should hand that over to a consortium of big banks in the country. so let's talk about the conversation here today specifically. i understand your point will you trust facebook or not it's not an issue with respect to
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the libra association program questions and concerns about the libra association itself because things like that coin the uncertainty around bit coin the wild fluctuations in my view means it won't be put into widespread use but to have billions of people around the world using this new coin that is the goal. is it not quick. >> really is to help people who don't have access. >> that billions of people and now this is tied to other currencies that are more stable it will be very widespread use there are huge concerns because in my view this obviously has a lot of questions that need vetted in the libra association say don't trust facebook but you do have to trust the libra
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association they are doing something very different in creating a new currency intended to be used by billions of peopl people. and there are lots of questions that use still need to answer or go people can conjure up the james bond movie with the organization specter. unless you are clear how this is transparent and accountable in all the ways we discussed is not an issue they trust facebook or trust this organization run by private companies. and my view is when you talk about a world currency used by billions of people, i'm not sure there is sufficient accountability you can build into that system to answer all the concerns but i look
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forward to the continued conversation. >> senator kennedy has asked for a second round then senator brown and i will go with another round that i think that will be at we may have another senator or to show up. >> mister marcus i want to follow up and the basis of the concern that i think we can agree that facebook is not really a company anymore. there's 20 billion people that use it but i don't see anything in the documents that i have seen that would prevent members of calibra once libra is prevalent throughout the world to say we don't believe in abortion rights. and we have the transaction
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data of these people so we will say if you believe in abortion you cannot use libra or vice versa. and you can make that assessment on the basis of any persons position or socioeconomic issue issues. you need to address that. let me ask a question there is a big issue on trust here but on may a couple years ago 2016 there was an article that appeared that the news curators on facebook were in charge of the trending new section. do you know what i'm talking about cracks i don't thank you have it anymore. but they testified they were instructed by the management of facebook to suppress new stories of interest to
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conservative readers even if it was trending and they stated they were told to suppress new stories about cpac, scott walker, rand paul, mitt romney, new articles from the "washington examiner". one of the curators even kept a log. is that true quick. >> senator i was not part of that team. i'm not aware of how it functioned but that product does not exist anymore. >> the news curators also say they were instructed to include in the trending new section articles from publications whether they were true or not and two of those were cnn and new york times. is that true quick. >> again i was not involved this is not my product team this is even possibly prior to
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my time but i will say that facebook really is a technology platform that is neutral. >> i have another question. the curators said they were told by management not to ever put an article in the trending new section about facebook. is that true that's not my team i am not aware. >> is there any data that facebook has on its customers that facebook would not monetize on principle quick. >> senator the way the data is used on facebook when it comes to monetization is making better apps for people. >> i'm not trying to interrupt you but is there any data on
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facebook that would save me will not money make money on this. have you ever thought about that quick. >> it's not about making money but as far as calibra is concerned. >> is not about making many quick. >> typically we look at data in a way to make money including improving. >> let me stop you now. you are telling me that money is a secondary concern of facebook quickstart you have shareholders quick. >> we do. but i believe it is important we first and foremost serve our customers we've done that with messaging apps and that is a testament to what we can do to lower cost for people. >> last question with 19
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seconds. do you know these people quick sheryl sandberg, elliott, or monica quick. >> i do. >> is it true that mister zuckerberg told them to meet several times and consider shutting down then candidates facebook trumps website in 2016 because mister zuckerberg disagreed with his views on immigration quick. >> i am not aware. >> you just don't know it would surprise me but i'm not aware. >> last question i promise. i have see this description. if you and i interface on facebook, it's really not just to participants but you, me, and facebook. is that an accurate
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description cracks. >> on messaging platforms but in this case it would be the two of us. >> this really is my last one. with libra catches on with 200 million people using i it, somebody would have the data on all the financial transactions of those 200 million people have consummated which will indicate what they are buying or not buying and treasure trove of information. you are telling me that nobody is calibra will monetize that crack. >> when it comes to the libra association they were not have any personal identifiable data there is no way.
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>> somebody has the data. >> those that provide the services of the data for their own wallet. >>. >> for the calibra wallet. >> but at some point those will send an e-mail to say if we share your data the details are here click on this it will refer you to attend page a single page disclaimer that you could hire a dead biter body and nobody would ever find it that happened. >> no senator. >> thank you for sitting here through this. i know you don't respond to partisan comments but i just want to ask the republican senators staff every letter to facebook from this committee from any of us have been
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jointly signed by us and that's important to know. it's clear from this hearing that this mistrust facebook is a pretty universal feeling senator kennedy and senator mc sally and senator smith and others. it is an issue you need to deal with. i want to read back what you said to me about trust. senator you heard it directly from market i will reiterate this i responded i do not hear from mark and you said trust is primordial we have made mistakes in the past. so i know what the word trust means and primordial but what does that mean quick. >> you said apparently mark zuckerberg said it i believe if he said he said that what does that mean quick.
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>> it means we need to continually to do better to serve the customers and users we are serving and we will do what it takes to earn their trust and that is definitely the case as well for libra and the calibra wallet. >> the same mark zuckerberg that people trusted them with their data said dumb and then started with the f word with 4000 e-mails that people just submitted i don't know why they trust me dumb with that profanity go and then i hear you quoting him and then you say trust is primordial but that definition is from the beginning of time.
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for the problem is people don't trust you. >>'s that we need to continue working very hard to ensure we are deserving of trust. >> but why would you lead with trust is primordial brexit so much in your dna that you can always trust us but then just display one time after another all the times you have deceived, undermined and betrayed that trust? again senator said over and over with all of your problems why should we trust you on something as important as a worldwide currency and the damage that can come from it quick. >> this is why we set up libra the way we have because we will not control it we are among of 100 different participants to govern over the currency and as a result
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we have to earn people's trust if we want them to use our products and services and then with those established companies that have a lot of trust. >> and you're only one out of 100 with 2 million people that george orwell and those are created more equal than others but nobody like you is a preeminent player. >> i believe there might be a misunderstanding that those two the ability to onboard all the people using products
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automatically are naturally we will not even use facebook logins they have to create a new account upload their government issued id and as a result there will be a lot of friction and we have to make a very strong commitment so people trust us and we will honor those commitments to earn people's trust because while we do that there are other wallets that already have those customers that can enable libra and we are not in a position. we have to work very hard to earn products and services. >> it's pretty hard to trust with so little contrition about the 2016 election with the media to journalism and what you have done it's pretty
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hard to trust you with a worldwide currency. >> i believe the status quo but it's time for a new progress to happen with those that are left behind and that's why we are deciding to take the lead and then relinquish the lead. >> i wish we can trust facebook is pretty clear that nobody on this committee does. thank you. >> i will ask my final rounds of questions but go mister mark as i stated in previous earrings ensuring that individuals have real control over their data is critical and you have adequate assurances i'm personally
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convinced if we don't without sectoral approach and then to have such a law with the gdpr. with the right to information and then when the data is collected and then to opt out or in in those third-party developers and then to be captured under the gdpr.
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>> under that jurisdiction of different wallets we will definitely have those highest standards with privacy in those policies and commitments you have my commitment we will share those with you. >> thank you. as i understand it, using block chain technology with personal private data, you indicated a person would have to provide their government issued identity and then from that point calibra would have their id and know the basics that is on the government id and i assume that is connected to coded data in the block
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chain quick. >> no actually the block chain will not include personally identifiable data. >> word calibra connect to the block chain to the user quick. >> that will depend on whether the transaction is initiated from a calibra customer or not. >> if it was, would calibra then you read i know the identity of the person engaging in that transaction quick. >> yes senator because they would be using your product. >> what had else i what other data could calibra use if it wanted the mindset that we are establishing the product in the privacy will only collect
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the information required to offer the service but also keep accounts safe which is very important to money especially with strong customer protection programs we need to protect that data and that is helpful in consumer accounts. >> does that mean the item purchased as a part of the data quick. >> that depends. i don't believe we need that information other than the purposes of securing accounts or other purposes. >> i have been told the block chain technology allows enhancement privacy protection do you believe that is the case that the block chain technology reduces the
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potential for the abuse collecting data on individuals quick. >> yes. typically it enables people to use software they can run on their own and as a result they can be their own sovereign of the data that is used and then it's a question of choice they could have consumer protections and on the other cell sovereign but there are opportunities of block chain technology for people to own their own data. >> so with the libra proposal with that technology issue with that current transactional technology or bank account transactions if
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we were to see a move globally with the use of block chain technology for currency transactions, would that represent an opportunity to enhance personal privacy quick. >> it can be if implemented correctly. yes. >> i will learn more about that maybe you can give me more information on that. thank you. >> before we gavel my belief is it's critically important policy makers and regulators understand the rules of the road as this project continues to develop go to the extent gaps within the us authority to become apparent whether legislation is awarded the us regulators of not unfair lie unfairly relegated to the sidelines with oversight of
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this project and others like it. that concludes the questioning for today's hearing for senators who wish to submit questions for the record those are due by tuesday july 23rd mister marcus please respond as promptly as you can and again thank you for being here this hearing is adjourned. >> thank you chairman. [inaudible conversations] [inaudible conversations]
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[inaudible conversations] s "washington journal " live every day with news and policy issues that impact you. coming up, we will preview what is coming up for the week with siobhan hughes, congressional reporter for the wall street journal. and then policy director for defense priorities on the latest intentions -- latest tensions between iran and the u.s. join the discussion. road to the white
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house coverage continues this morning with minnesota senator and democratic presidential candidate amy klobuchar who is being interviewed at a washington post live event. we start at 9:00 eastern. of john paulket stevens arrives at the supreme court where it will lie in repose for most of the day. died july 16 at the age of 99. next, family members and thick -- of victims of the most recent boeing 737 max 8 aircraft crash testified for the first time on capitol hill. they appear before the --nsportation subcommittee subcommittee hearing that is looking to increase safety.


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