US Senate Grills Facebook's Crypto Chief As JP Morgan Chase Dismisses Threat From Libra

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Libra’s David Marcus just faced the US Senate in the first of two consecutive hearings where lawmakers grilled him about Facebook’s foray into the financial services industry as well as the company’s tarnished past with respect to user data and Russian interference in the 2016 US presidential election.

Marcus was also questioned on how the social networking giant would handle a transaction using Libra that was executed by an individual from a sanctioned country.

While Marcus assured the panel that Libra will be registered with the Financial Crimes Enforcement Network (FinCEN) and will uphold its anti-money laundering standards, he gave less than a direct response when asked if Facebook’s platform would freeze the assets of a sanctioned individual.

According to Marcus,

“It would be the role of the custodial wallets to block access to funds for those addresses.”

The Facebook hearing highlights the fact that corporations issuing digital assets lack the censorship-resistance of decentralized cryptocurrencies such as Bitcoin which do not operate under the auspices of a government or centralized authority.

Meanwhile, CEO of JP Morgan Chase Jamie Dimon says he doesn’t see Facebook’s Libra project as a near-term threat. During a conference call with analysts, Dimon dismissed the notion that Facebook could build a new blockchain-based global financial structure that would challenge the status quo, reports CNBC.

Says Dimon,

“To put it in perspective, we’ve been talking about blockchain for seven years and very little has happened. We’re going to be talking about Libra three years from now. I wouldn’t spend too much time on it.”

Dimon, who leads the largest bank in the US, is currently developing JPM Coin, a corporate digital currency that is pegged to the US dollar and designed to leverage blockchain technology to settle transactions quickly.

The idea that Facebook should be able to launch a bank-like platform that allows its 2.5 billion registered users to enjoy financial services outside of the regulated banking industry doesn’t make sense to Dimon. He says, however, that the bank doesn’t mind competition.

“The request is always going to be the same: We want a level playing field. And governments are going to insist that people who hold money or move money all live according to rules where they have the right controls in place. No one wants to aid and abet terrorism or criminal activities.”