Beyond the flash crash and bearish momentum, anyone monitoring the crypto space will have noticed that Facebook is dominating the headlines.
As Zuckerberg stood before the US Congress yesterday attempting to defend project Libra, many murkier details emerged. Aside from the debate over whether the proposed digital currency will get the go-ahead, here are the top five takeaways from Zuckerberg’s Libra testimony.
1. The US will lose the innovation race if they fail to act
As Coin Rivet reported yesterday, one of Zuckerberg’s trump cards in fighting for his project was the fact that China is racing ahead while the US drags its heels.
“China is moving quickly to launch similar ideas in the coming months,” he warned.
“If America doesn’t innovate, our financial leadership is not guaranteed.”
The China threat may have carried some weight in the US Congress. However, one Republican member from Ohio Anthony Gonzalez was quick to remind the court “this isn’t Mark Zuckerberg versus Xi Jinping”.
2. Katie Porter’s questioning revealed a darker side
One of the high (or low) lights of the hearing was Republican Katie Porter’s relentless hounding of the Facebook CEO over the role of Content Monitors at Facebook.
She said that Facebook was known as a great place to work, with free food and other benefits. However, “Facebook doesn’t use its employees for the hardest jobs in the company”.
She pointed out that it was poorly paid contractors who had to watch brutal stabbings, murders, and other gruesome content. They’re apparently paid minimum wage and have no access to healthcare even if their job results in PTSD. If you missed that part, watch the video clip below. It’s unreal.
Just watch @RepKatiePorter's questioning of Mark Zuckerberg.
Devastating.pic.twitter.com/q5f8kUngO3
— Judd Legum (@JuddLegum) October 23, 2019
3. Zuckerberg admitted that Facebook lacked trust
As the Court repeatedly lashed out at Mr Zuckerberg, it often felt as if they wanted to discuss Facebook’s other issues and not the Libra project. Among their complaints were data privacy issues, lack of staff diversity, misleading political advertising, and Cambridge Analytica.
As Zuckerberg attempted to steer the narrative back to Libra, he admitted his company currently lacked trust.
“I get that I’m not the ideal messenger for this right now. We’ve faced a lot of issues over the past few years and I’m sure there are a lot of people who wish it were anyone but Facebook that was helping to propose this”.
4. Facebook will quit Libra if it doesn’t win US approval
One of the aspects of the Libra association that seemed to really bother the committee was the fact that it was set up in Switzerland. Democratic congressman Juan Vargas went as far as to call the alpine nation the “grandfather of the world’s secretive tax havens”.
However, Zuckerberg insisted that Libra will not launch without US regulatory approval. He said:
“Even though the Libra association is independent and we don’t control it, I want to be clear, Facebook will not be a part of launching the Libra payment system anywhere in the world, even outside the US, until the US regulators approve”.
He did not, however, commit to bringing the association back to the States.
5. The basket of currencies may be redistributed
In a move to appease the US Court, who repeatedly grilled Zuckerberg over Libra being used by criminals and terrorists, for money laundering and nefarious deeds, the Facebook CEO stated that he was flexible over the distribution of the basket of currencies.
The proposed currencies to peg the Libra currently include a mix of the dollar, the British pound, the euro, the yen, and the Singaporean dollar.
But he said it would be “completely reasonable” if US regulators wanted to restrict Libra to being “primarily backed” by dollars. This ties back into his initial argument of the US losing financial leadership if they fail to innovate. If Libra is backed mostly by dollars, Zuckerberg said:
“I believe that it will extend America’s financial leadership around the world, as well as our democratic values and oversight.”
The takeaway
While Libra’s futures looks decidedly uncertain and the court seemed to use the testimony as a chance to attack the tech entrepreneur over just about every issue under the sun from facilitating criminals to social injustice, one prominent leader in the crypto space made an excellent point.
Every politician grandstanding against #Zuckerberg today will likely be posting their performance on Facebook, where their followers will click the Like button.
— Erik Voorhees (@ErikVoorhees) October 23, 2019
Every politician that raged on Zuckerberg yesterday will more than likely be using his platform to share their performances today.
Featured image from YouTube.
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.