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Column: Why Facebook’s digital currency project is making Congress nervous
08292018 TOM BAXTER
Tom Baxter

Last week, about the same time three of his Georgia Republican colleagues were ordering pizza from the secure room where the impeachment inquiry was supposed to be going on, U.S. Rep. Barry Loudermilk was spending a little time with Mark Zuckerberg. 

The Facebook CEO came to Washington to promote Libra, the company’s digital currency project, but fully aware the House Financial Services Committee had a lot it wanted to talk with him about. That included Facebook’s impact on elections and the culture generally, its responsibility for circulating offensive or inaccurate material, whether it had grown too big, and its willingness to police itself.

“Fair or not, you’re here today to answer for the digital age,” U.S. Rep. Patrick McHenry, a North Carolina Republican, told Zuckerberg.

Zuckerberg got quite a grilling, but not from Loudermilk, who paid him maybe the highest compliment he could think of. He compared him to Donald Trump. Both are billionaires, businessmen and innovators, but most important, he said, “You both challenge the status quo. This town is intolerant to shaking up the status quo.” 

Even his harshest critics would likely be posting their comments on Facebook, if they had not done so already, the admiring congressman said. 

“Everyone wants to put what you’re doing in a box, and quite often when you’re thinking outside of the box, there isn’t a box to put it in,” Loudermilk said. 

A little later in the hearing, Rep. Juan Vargas, a California Democrat, asked Zuckerberg if he took the comparison with Trump as a compliment. He quickly assured the obviously discomfited CEO he was just joking. 

One trait these two disrupters don’t share is loquaciousness. Trump lets on more in a couple of tweets than Zuckerberg did in his daylong testimony. He couldn’t recall when exactly he first heard of Cambridge Analytica, the firm implicated in the misuse of user data to influence the 2016 election. He didn’t know precisely to what standard Facebook intends to hold political ads, or much of anything he was asked about. Where Trump sometimes gives the impression he’s generalizing about aspects of the government he doesn’t know in detail, Zuckerberg would have you believe he knows little about the details of the company he founded and heads. 

Zuckerberg isn’t about to be impeached, but his visit to Washington didn’t go well. Chairwoman Maxine Waters began by telling him she thought Facebook had grown too big and powerful, and probably should be broken up. 

There was widespread skepticism on the committee about Facebook’s foray into the world of cryptocurrencies — the Zuck Buck, as some have dubbed it. Even Zuckerberg admitted that Facebook wasn’t “the ideal messenger right now,” for the project. Several companies which initially signed on to the project, including PayPal, EBay, Visa and Mastercard, have already withdrawn their support. 

But, Zuckerberg said, somebody had to do it. 

As described in his testimony, Libra is designed to make sending money “as easy and secure as sending a text message.” About a billion people around the world, and 14 million in this country, have cellphones but don’t have access to a checking account, and that’s the market Zuckerberg envisions. It would be a global transfer system, backed by a reserve of cash and other securities. 

If the United States doesn’t grab this market (which, incidentally, includes virtually all the undocumented workers in the world) then China will, Zuckerberg said. The People’s Bank of China is close to the release of its own digital currency, and is eyeing the Libra project with suspicion. 

“If commercial companies can issue various currencies, this world will be in chaos. That is equivalent to returning to the primitive society. This is ridiculous, so I personally believe that Facebook's Libra would never be a success,” Huang Qifang of the China Center for International Exchanges said at a financial conference in Shanghai last week. 

Zuckerberg assured the committee Facebook won’t move ahead with Libra without the approval of U.S. regulators. But he didn’t make it contingent on the approval of Congress, and he was fuzzy on just which regulators he was speaking of. Even if Facebook didn’t go forward, Libra, the creature of Facebook, has been set up as an international foundation, which would continue to exist even if Facebook left it.

Which sounds much like that box Loudermilk was talking about. And a little like Donald Trump.

Tom Baxter is a veteran Georgia journalist who writes for The Saporta Report.

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