Libra Increases Need for Federal Privacy Bill, Chairman Crapo Says
Facebook’s cryptocurrency project Libra provides more incentive for Congress to pass comprehensive privacy legislation, Senate Banking Committee Chairman Mike Crapo, R-Idaho, told reporters Tuesday, after testimony from Facebook Calibra Head David Marcus. The platform won’t offer Libra until it receives proper approvals from U.S. and foreign regulators, Marcus told the committee, as expected (see 1907150051). Libra’s goal is to offer a secure, safe and low-cost way for people to transfer money internationally, he said, arguing a U.S. company should lead the push.
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Crapo told reporters cryptocurrency innovation is inevitable, and agreed the U.S. should be at the forefront. The legislator stressed a need for clear guidelines.
The U.S. solution to data collection issues should be a mixture of its traditional sectoral regulatory approach and something that applies to broader privacy issues like with EU’s general data protection regulation, Crapo said. He called for broad, cross-sectoral privacy rights that Congress can build “on top of” in different sectors. The conversation needs to move beyond any one company, he said, adding he hopes the committee introduces its own legislation on data. Crapo wants to understand if a global shift toward blockchain technology could present opportunities to enhance personal privacy.
Ranking member Sherrod Brown, D-Ohio, called Facebook “dangerous.” The platform doesn’t respect the power of the technology it's “playing with,” like a toddler who has gotten a hold of a box of matches, he said. The company has burned down the house repeatedly and regarded every arson as a learning experience, he added.
The hearing suggested the company is “arrogant enough to just blast ahead on this,” Brown told reporters afterward. If that’s the case, Brown envisions bipartisan support for legislation that would thwart Facebook’s plans. Congress needs legislation that addresses data breach issues like those of Equifax and something that targets the tech sector’s selling of consumer data without proper notice, Brown said: “I don’t know yet” if it will be “comprehensive. It’s what we can pass in this Congress,” he told reporters.
Facebook chose to set up its Libra Association in Switzerland not to avoid responsibility in the U.S. but because Geneva is an international hub for financial services, Marcus testified. The company is committed to satisfying all U.S. regulators, he said. No financial data collected through Calibra will be shared with Facebook, he said. Calibra will compete with several other wallets, which means Facebook must offer the highest privacy standards to compete, he said. Brown was skeptical, saying Facebook is the only Libra Association member with access to 2 billion users.
Sen. Pat Toomey, R-Pa., asked his colleagues to reserve judgment about Libra, saying it’s “wildly premature” to strangle the baby in the crib. Sen. Thom Tillis, R-N.C., called the cryptocurrency market the “wild, Wild West.” The U.S. has an opportunity to set an international standard that could set better consumer protections for other crypto projects, Tillis said.
Libra presents several business opportunities, Marcus said. Some 90 million businesses that interact with Facebook could lead to more advertising revenue through Libra, he said. Another motivation is that if Facebook earns user trust through Libra, it can partner with financial entities and banks on related projects. Data collection is a necessary element of Libra, Marcus said. Users at least will need to submit government-issued identification to use the currency, he said.
Sen. Brian Schatz, D-Hawaii, suggested Facebook shouldn’t take on such a massive project when it’s yet to fully address privacy, foreign interference and harmful content. No matter how much progress, those issues will always require a great deal of work, Marcus said: The platform needs to continue using its resources and talent to innovate. “Because you’re so big, you should get bigger,” Schatz said. Marcus disagreed with the characterization.