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Ever since Facebook announced its cryptocurrency project, Libra, on June 18th, news and speculation of the social media giant’s foray into the crypto space has dominated the news cycle. That hype only escalated this past week when the U.S. Senate Banking Committee and the House Financial Services Committee held hearings on Libra, hearing from Calibra CEO David Marcus and an expert panel.
SFOX has distilled the 10 takeaways you need to know from those hearings. Read on to find out lawmakers’ takes on Libra, Facebook, and crypto at large.
1. Congress Understands the Difference between Libra and Cryptocurrency
During the U.S. House Financial Services Committee’s interview of a panel of experts, a common refrain from expert witness and CoinShares CSO Meltem Demirors was that Libra was not really a cryptocurrency.
“What [Facebook] is attempting to do,” Demirors told Congressman John Rose (R-Tn.), “is not to create a new payment system. What they’re attempting to do is to pass off this idea as a cryptocurrency, which it is not. They’re attempting to use regulatory cover to get away with doing something that would typically be regulated, which is asset management. It’s fundamentally different [than Bitcoin].”
Consistent with this refrain, Congress seemed more interested in the future of Facebook as a financial services entity, not in Bitcoin or the cryptocurrency sector per se.
2. Congress Is Worried about Facebook Being “Too Big to Fail”
With the word “oligopoly” bandied about multiple times during the Wednesday congressional hearing, one of Congress’s main concerns was Facebook forming a consortium of powerful companies that could become “systemically important,” invoking the specter of the “systemically important” financial institutions involved in the 2008 financial crisis.