Facebook's Libra is really a 'Zuck buck' says lawmaker

By MarketsFOXBusiness

Rep. Sherman: They're not going to call it Libra, they're going to call it ZuckBuck

Rep. Brad Sherman, D-Calif., on concerns over Facebook's plan for a cryptocurrency called Libra.

Facebook’s cryptocurrency Libra is facing an identity crisis and it hasn’t even officially been launched.

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In two days of bruising testimony, Facebook cryptocurrency chief David Marcus faced tough questions from lawmakers on both sides of the aisle who are concerned about Zuckerberg's involvement, privacy, oversight and whether the currency can easy manipulated, potentially against the U.S. dollar.

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“When it finally happens, nobody is going to call it Libra. They're gonna call it the 'Zuck buck.' This is Zuckerberg’s baby,” said Rep. Brad Sherman, D-Calif., on Thursday.

He also alleged the currency could be abused by bad actors.

“The Libra protocol does not link accounts to real-world identity, a user is free to create multiple accounts by generating multiple key pairs. So, this is a godson to drug dealers and sanctions evaders and tax evaders,” Sherman warned.

Lawmakers remained skeptical on how Libra will be policed. In prepared testimony, Marcus explained that the Libra Association will oversee the final product; "Facebook teams have led the creation of the Libra Association and the Libra Blockchain and will maintain a leadership role through 2019. Once the Libra network launches, however, Facebook 4 and its affiliates will have the same privileges, commitments, and financial obligations as any other founding member of the Association. We hope to have approximately 100 such members before the Libra Blockchain launches."

Facebook did not provide a statement on Sherman's remarks but did offer clarification that service providers will be responsible for preventing illicit activity, not the association.

Following the hearing, Marcus thanked Maxine Waters, D-Calif., the chair of the House Financial Services Committee, saying in a tweet: "We will take the time to get this right."

Members of Congress are not the only skeptics. Thursday at the G-7, U.S. Treasury Secretary Steven Mnuchin reiterated his concern about Libra.

Earlier this week, he held a press event and told reporters, “I didn’t say I was comfortable with [Facebook] launching a currency … I’m not comfortable today”... “They … have a lot of work to do before they get us comfortable.”

JPMorgan Chase CEO Jamie Dimon downplayed its significance on the bank’s earnings call this week.

“You’re going to be talking about Libra three years from now. I wouldn’t spend too much time on it,” he said.

Federal Reserve Chair Jerome Powell has also raised a red flag telling lawmakers last week, "Libra raises many serious concerns regarding privacy, money laundering, consumer protection and financial security. These are concerns that should be thoroughly and publicly addressed before proceeding."

President Trump even weighed in on cryptocurrencies, via a tweet, suggesting Facebook would need to establish a banking charter to launch Libra.

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"If Facebook and other companies want to become a bank, they must seek a new Banking Charter and become subject to all Banking Regulations, just like other Banks, both National and International," he said.