Facebook: The US Needs Libra to Counter China’s Cryptocurrency

Facebook: The US Needs Libra to Counter China’s Cryptocurrency

UPDATE: Here’s the full rundown on what happened at this week’s hearing.

Facebook CEO Mark Zuckerberg will try to convince US lawmakers to back the company’s Libra project by pointing to threat of China developing its own cryptocurrency to influence the world’s financial markets.

On Wednesday, Zuckerberg is slated to appear(Opens in a new window) before the House Financial Services Committee to discuss the company’s Libra project, which is facing scrutiny from governments across the globe. A key concern is whether the proposed crytocurrency risks handing too much power to Facebook when its reputation has taken a dive on the company’s privacy scandals and its struggles to fight misinformation.

A day before the hearing, Zuckerberg released his prepared remarks(Opens in a new window), which say Facebook will only move forward on the Libra project until it secures approval from US regulators. The goal with the cryptocurrency is to simply provide internet users —particularly those without access to banks— an alternative way to send money that’ll be as easy as sending a text over a smartphone, Zuckerberg plans to say.

“I want to be clear: this is not an attempt to create a sovereign currency. Like existing online payment systems, it’s a way for people to transfer money,” he adds.

Zuckerberg acknowledges “weren’t not the ideal messenger right now” on promoting a global cryptocurrency effort. “We’ve faced a lot of issues over the past few years, and I’m sure people wish it was anyone but Facebook putting this idea forward,” he says.

However, Zuckerberg claims there’s also a risk if US lawmakers try to stymie the Libra project. “While we debate these issues, the rest of the world isn’t waiting. China is moving quickly to launch similar ideas in the coming months,” he says, later adding: “If America doesn’t innovate, our financial leadership is not guaranteed.”

Indeed, China’s central bank is preparing to launch a state-back digital currency, which its been researching since 2014, according(Opens in a new window) to Reuters. So far, the bank has refrained from releasing details about the virtual currency project, but it’s poised(Opens in a new window) to give the Chinese government even more power to monitor the spending habits of citizens across the country. The prospect has Zuckerberg worried.

“If America doesn’t lead on this, others will,” he says, before adding: “We’re already seeing how companies with very different values are restricting people based on their beliefs. There’s no guarantee that services which support democracy and fundamental rights around expression will win out.”

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Mentioning the rise of China is starting to become a go-to defense for Facebook. Last week, Zuckerberg made a similar argument in a speech about Facebook’s content moderation practices amid concerns the social network is failing to rein in misinformation over political ads. “While our services, like WhatsApp, are used by protesters and activists everywhere due to strong encryption and privacy protections, on TikTok, the Chinese app growing quickly around the world, mentions of these protests are censored, even in the US,” he said. “Is that the internet we want?” (Earlier this year, Facebook chief operating officer, Sheryl Sandberg, also mentioned(Opens in a new window) the threat of Chinese companies gaining too much influence over the US market.)

We’ll have to wait and see how US lawmakers respond to Zuckerberg’s remarks during Wednesday’s hearing, which will be livestreamed(Opens in a new window). But the Libra project is already losing support from its private sector partners. Earlier this month, PayPal, eBay, Stripe, Mastercard and Visa all bailed as founding partners of the Libra Association, which will oversee the cryptocurrency’s blockchain and governance.

PCMag Logo Libra’s backers are now reconsidering supporting the cryptocurrency

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