Facebook founder Mark Zuckerberg appeared before Congress on Wednesday to clarify his company's plans for the planned Libra cryptocurrency.
Zuckerberg made lawmakers uneasy with the idea of a scandal-ridden company butting into global finance what can best be described as a hard sell.
"I believe that this is something that needs to get built," Zuckerberg said in his opening statement, while implying that Facebook is merely the reluctant messenger for this inevitable scenario. "I get that I'm not the ideal messenger for this right now," he added.
While Zuckerberg paid brief homage to Libra's supposed mission to give unbanked people access to financial services, much of the hearing revolved around China. In Zuckerberg's telling, the U.S. needs a domestic corporation to launch a global payment system backed largely (but not completely) by the U.S. dollar or else other nations will adopt one backed by China. For months, details about a digital currency developed by China have been leaking from the country. Facebook executive David Marcus also raised the specter of a Chinese digital currency as a reason for Libra's supposed necessity in an interview with Bloomberg.
Libra will extend America's "financial leadership" abroad, Zuckerberg said, as well as the "values" that such "leadership" imparts. Democratic Congressman Juan Vargas explained what this means in plain language. "The dollar is very important to us as a tool of American power," Vargas said, and the U.S. "would rather lay sanctions than send our soldiers there."
In response, Zuckerberg said that Libra (or at least Facebook's slice of it) is being designed to enforce U.S. sanctions. "If we don't innovate, there's no guarantee that we can extend those same rules and project that kind of influence around the world going forward," he said.
"We need to weigh any risks of a new system against what I think are are surely risks if a Chinese financial system becomes the standard in more countries," Zuckerberg said at another point during the hearing. "Then it would be very difficult, if not impossible, for us to impose our sanctions or the kinds of protections that I think we're right to want to have oversight around the world on all these different countries."
Libra, which Facebook unveiled in June, is envisioned as a digital token backed by cash and "highly liquid assets" that people all over the world could use to transact. Facebook is taking the lead on Libra for now, but eventually control will be handed to an ostensibly independent founding board of 21 companies and nonprofits known as the Libra Association, which is based in Switzerland. Facebook seems to see itself as just one part of an eventual Libra ecosystem and plans to launch a wallet service called Calibra.
As for how Facebook plans to make money on Libra, Zuckerberg said that frictionless payments on Facebook would result in more value for the social network's ad business.
Despite the clear narrative push for the necessity and inevitability of Libra, it's anything but a settled proposition. In the face of looming regulatory pressure, several Libra Association members—including PayPal, MasterCard, and Visa—have already dropped out of the project.
And then there are the deep concerns over privacy when a company like Facebook (or the members of the Libra Association, which includes Uber) has any visibility whatsoever into people's financial transactions.
Whether Zuckerberg is earnest at all in his naked appeal to American power, or if it's just another tactic to sell Libra to a skeptical audience, is unclear, as Facebook (like any corporation) pretty much just cares about making money.
At the hearing, Zuckerberg pledged that Facebook will not launch Libra products anywhere in the world without U.S. regulators' approvals.