David Marcus, who is spearheading Facebook’s Libra as head of blockchain, explains that the new platform will not operate as a shadow bank. In his testimony on Wednesday before the United States House Committee on Financial Services, Marcus clarifies,
“We will not offer banking services.”
Instead, Marcus describes the new Calibra platform as a payment services company, like Venmo and Paypal, and affirms that it will not share individual customer data with the Libra Association or Facebook.
Marcus says he does not consider Libra to be a security or an exchange-traded fund, remarking that it could possibly be considered as a commodity.
Representative Ed Perlmutter told Marcus he supports innovation but the concern over Libra is in the unknown – and what will happen once Facebook’s new genie is out of the bottle.
“We all have this same question for you and that’s the resistance you’re feeling because we think you’re a bank, but you’re not quite like a bank,” Perlmutter said. “And if you’re a bank, we regulate the heck out of you because we’ve seen a lot of people lose money where there hasn’t been regulation. So that’s the resistance that I feel, I want to support your innovation I want to support the efficiency that you people believe you’re bringing to the table. But I also don’t want anybody getting hurt here.”
Libra is somewhat intended to resemble a stablecoin that will be tied to a basket of fiat currencies and government bonds, and members of the Libra association will receive a Libra investment token that derives its value from the collateral on that basket – “the Libra Reserve.”
The former chairman of the Commodity Futures Trading Commission believes Libra should be regulated like a security.