Mark Zuckerberg addresses Libra's regulatory, KYC issues in leaked meeting audio; major backers are now hesitating
Wed, 02 Oct 2019, 17:24 pm UTC
Facebook CEO Mark Zuckerberg recently addressed regulatory and customer identification problems pointed out by employees over the social network’s upcoming Libra cryptocurrency.
As per a leaked audio recording from an internal meeting obtained by The Verge, Zuckerberg acknowledged the criticisms being thrown over the project. However, he restated Libra’s aim of attempting to “stand up a new kind of digital money that can work globally.”
He further emphasized that this new system will be implemented not only by Facebook but by several big firms. “By the time it launches, we expect we’ll have 100 or more companies as part of it," he stated.
Noting that the finance market is a “heavily regulated space,” he urged the Facebook team to have a more “consultative approach” when launching a project “touch very socially important aspects of society.”
“There’s a lot of important issues that need to be dealt with in preventing money laundering, preventing financing of terrorists and people who the different governments say you can’t do business with. There are a lot of requirements on knowing who your customers are. We already focus a lot on real identity, across especially Facebook, so there’s even more that we need to do in order to have this kind of a product,” Zuckerberg noted.
With regard to the public scrutinies Libra has been experiencing since its introduction, Zuckerberg thinks that these public hearings appear to be “a little more dramatic” than private ones. “But a bigger part of it is private engagement with regulators around the world, and those, I think, often are more substantive and less dramatic.”
Meanwhile, new reports by Bloomberg and the Wall Street Journal suggest that major Libra backers Visa, Mastercard, PayPal, and Stripe are having second thoughts in their participation in Libra.
“Executives at the payments companies believe Facebook oversold the extent to which regulators were comfortable with the project and are concerned about the perception that the social network hasn’t behaved responsibly in other areas,” the article on Bloomberg reads.
In response, David Marcus, Facebook's blockchain lead and Libra’s co-founder, took to Twitter to clarify some facts:
2) change of this magnitude is hard and requires courage + it will be a long journey. For Libra to succeed it needs committed members, and while I have no knowledge of specific organizations plans to not step up, commitment to the mission is more important than anything else;— David Marcus (@davidmarcus) October 1, 2019
3) The part of this article suggesting we weren't on top of, or didn't share detailed information about how to secure Libra and protect the network against illegal activity is categorically untrue; (worth calling BS)— David Marcus (@davidmarcus) October 1, 2019
4) The tone of some of this reporting suggests angst, etc... I can tell you that we're very calmly, and confidently working through the legitimate concerns that Libra has raised by bringing conversations about the value of digital currencies to the forefront.— David Marcus (@davidmarcus) October 1, 2019
According to the Wall Street Journal, the members of the Libra Association are scheduled to meet on Thursday in Washington, D.C. The members are reportedly expected to tackle Libra’s charter in mid-October.
It can be recalled that a Libra executive had asked the other members of the project to show their support amid the increasing regulatory scrutiny it faces in the U.S. and Europe. While others plan to retreat, some have expressed their intent to stay and public support the project, including Coinbase, Xapo, Anchorage, Bison Trails, Andreessen Horowitz (a16z), and Union Square Ventures.
Also, Marcus has called for the need to change the existing payments system with blockchain-based payment networks. In a blog post, he emphasized Libra’s capabilities to facilitate near real-time cross-border transfers at a lower cost and without the need for liquidity pools of different currencies.
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