David Marcus, the head of Facebook’s new Calibra payments division, appeared earlier than two hostile congressional committees this week with a simple message: Facebook knows policymakers are involved about Libra, and Facebook will not move ahead with the project until their concerns are addressed.
While he didn’t say so explicitly, Marcus’ feedback at hearings on Tuesday and Wednesday represented a dramatic shift in Facebook’s conception of Libra. In Facebook’s original vision, Libra could be an open and mostly decentralized network, akin to Bitcoin. The core network could be beyond the reach of regulators. Regulatory compliance could be the responsibility of exchanges, wallets, and other services, which are the “on-ramps and off-ramps” to the Libra ecosystem.
Facebook now appears to recognize its original vision was a non-starter with regulators. So this week Marcus sketched out a brand new concept for Libra—one in which the Libra Association will shoulder significant responsibility for guaranteeing compliance with laws regarding money laundering, terrorist financing, and other monetary crimes.
Facebook’s new stance addresses a few of the questions I raised in last week’s Libra feature. But it additionally raises further questions that Facebook might want to reply in the coming months. Marcus stated Wednesday that the Libra Association would require regulatory compliance by Libra-based service suppliers. However, he did not explain the way it will accomplish that. Nonetheless, it is done; there’s likely to be an inherent tension between enhancing regulatory compliance and Facebook’s other targets to construct an open network and make it accessible to marginalized folks around the world.