WASHINGTON, D.C. — A digital currency that Facebook is trying to launch will be the subject of two congressional hearings this week — and five of Ohio’s lawmakers are on the committees hosting them.
“Libra” is a digital currency, or cryptocurrency, that is the brainchild of Facebook, various credit card companies, and technology giants like Uber and eBay.
It doesn’t exist yet, but it will likely soon. And it will join the ranks of digital currencies already out there, like bitcoin.
On Tuesday, the Senate Banking Committee will host a hearing to discuss Libra. Senator Sherrod Brown (D-OH) is the top Democrat on the committee.
On Wednesday, the House Financial Services Committee will take its turn. Rep. Joyce Beatty (D-03), Rep. Steve Stivers (R-15), Rep. Anthony Gonzalez (R-16) and Rep. Warren Davidson (R-08) sit on the committee.
“My biggest concern is that my colleagues in the House and across the Hill on the Senate [side] would actually get up to speed and ask intelligent questions,” said Davidson. “The last time Facebook was in front of the Senate, people remember for the out of sink kinds of questions that were asked. And so I’ve met with folks, trying to educate people on stuff that we’ve learned over the past couple years looking at the space more intensely.”
Davidson is a cryptocurrency supporter who wants the United States to play a direct role in regulating digital currency — because the U.S. currently is not.
He has sponsored the bipartisan “Token Taxonomy Act.” In a press conference last week, Davidson and his colleagues said not embracing digital currency will lead to more harm than good.
“So what you’ll see in the U.S. is, essentially, we run the risk of becoming a toxic pool where it’s dominated by the bad actors, and the good actors, they’re not leaving the U.S. to avoid our laws, they’re leaving the U.S. to find a law,” said Davidson.
His co-sponsor of the bill, Rep. Darren Soto (D-Florida), said, “We need to lead and not concede. Regulate, but not eliminate. And embrace the future, rather than be stuck in the past.”
Other Ohio lawmakers are more skeptical — specifically of Facebook’s role.
Stivers, a Republican on the financial services committee with Davidson, said in a hearing last week that he thinks Facebook is “attempting to undermine the dollar as the world’s currency.”
And Brown, the top Democrat on banking, said, “Facebook has not earned the public trust, and frankly the Trump-Wall Street regulators have not earned the public trust, so we’ve got work to do.”
President Trump even weighed in on Twitter last week, writing that Libra “will have little standing or dependability.”
Speaking with reporters at the White House on Monday, Treasury Secretary Steven Mnuchin said Facebook has a lot of work to do before the Treasury Department will support this digital currency.
He added that there’s concern that bad actors will exploit it.
But the cryptocurrency community says turning a blind eye to this future in finance could isolate the United States.
“The U.S. needs to be the leader in financial services and technology for the next 100 years, like we’ve been for the past 100 years,” said Kristen Smith of The Blockchain Association. “Unfortunately, our leadership is under threat. The most promising blockchain networks have already taken steps to distance themselves from the United States.”
Facebook recently announced Libra will be based in Switzerland, which Davidson called a missed opportunity.
Switzerland created registration requirements for cryptocurrencies several years ago and regulates them much like they do other financial services.
“If we had the right regulations, it’s quite possible that Facebook could have been headquartered in Ohio or Florida, New Jersey [or] North Carolina,” said Davidson, as he stood next to fellow congressmen from those states. “Somewhere here in the United States, instead of Switzerland.”
But Brown said he wants more details first because he feels Facebook has “no interest in the public interest.”
When asked if he’s confident Congress knows enough about cryptocurrency to hold productive hearings, Brown said:
“I think all of us have good staff. And cryptocurrency is a bunch of question marks to darn near everybody, but that’s up to Facebook to explain what they’re going to do and it’s up to us, as elected representatives of the public and the regulators, to make sure that they are forced to take the public interest into account.”
Back in May, Brown sent this letter to Facebook founder Mark Zuckerberg with questions about Libra.
Zuckerberg didn’t respond, but the man overseeing the digital currency wrote back last week.