Facebook Explains Libra Digital Currency to U.S. Senate

The social media company will testify before the US Senate Banking Committee, to explain the potential and reach of its Libra cryptocurrency.

Facebookis set for a hearing before the US Senate Banking Committee this July 16, to clarify the intentions of its Libra project. The hearing will be titled "Examining Facebook's Proposed Digital Currency and Data Privacy Considerations,"reportedMarketWatch.

Facebook immediately drew the ire of regulators in both the US and Europe, due to its ambitious bid of creating an alternative payment system. Because of the sheer promised size of the Libra economy, potentially reaching above 2 billion users, regulators were wary of the potential for creating a form of shadow banking.

A number of US Congress members demanded a delay on the launch of Libra, for further investigations on the coin’s impact on value transfers and privacy. Maxine Waters, head of the House Financial Service Committee, stated that Libra was part of an unacceptable, all-encompassing expansion for Facebook.

The case of Facebook is curious since until now, thousands of projects have launched blockchains with global outreach, without asking permission. Libra coin itself will not be owned by Facebook, but will be issued by a new entity founded in Switzerland. The network is already running in test mode, with nodes available and accessible. In the future, large-scale tech companies will participate in securing the coin, if it launches.

The upcoming hearing and the general skepticism of regulators, however, may delay the launch to the second half of 2020.

The announcement of Libra arrived at a moment when the digital asset market seeks to extend the gains from the positive developments in 2019. Bitcoin (BTC) market prices rising above $9,000 re-sparked hopes of a strong rally, once again inviting retail investors, but also some institutional investors.

The launch of Libra was seen as evidence that the ideas of blockchain and distributed ledger have taken off even with tech giants. At the same time, Libra is seen as going against the general idea of a free, permissionless network.