Facebook and Zuckerberg dig in for the long haul on cryptocurrency plan

Facebook CEO Mark Zuckerberg has vowed to move ahead with plans to create a cryptocurrency-based payments network.

Facebook CEO Mark Zuckerberg testifies before House Financial Services Committee hearing on Capitol Hill in Washington on Wednesday. Picture: AP

Facebook CEO Mark Zuckerberg vowed to move ahead with plans to create a cryptocurrency-based payments network, despite strong opposition from some politicians, sounding a note of defiance in a hearing where he and the social-media giant were pressed over issues of trust and credibility.

The harsh tone of questioning by members of the House Financial Services Committee on Wednesday illustrates Facebook’s delicate position. Mr Zuckerberg and other company executives remain eager to enter new areas of growth and launch new products such as libra. But three years after the 2016 election exposed the platform’s vulnerability to abuse, many politicians are increasingly uneasy about the company’s ambitions.

In his testimony, Mr Zuckerberg defended Facebook’s goal to offer financial services to more than a billion consumers around the world through libra, a digital coin designed to be used to buy things online and off and send money domestically and overseas, while acknowledging the risks to meeting that goal.

“I actually don’t know if libra is going to work,” Mr Zuckerberg said during the roughly six-hour hearing. Still, he pledged to refrain from participating in libra’s launch anywhere in the world unless US regulators approved of it.

Since Facebook announced its vision for libra in June with a group of 27 other companies, US politicians and regulators have voiced concerns about its effect on financial stability and data privacy. European officials have tried to halt its launch. That criticism continued on Wednesday, with many Democrats and some Republicans blasting the project, while others praised Facebook for trying to innovate.

“As I have examined Facebook’s various problems, I have come to the conclusion that it would be beneficial for all if Facebook concentrates on addressing its many existing deficiencies and failures before proceeding any further on the libra project,” said Democrat Maxine Waters, the committee’s chairwoman.

Patrick McHenry, the committee’s top Republican, said he had his “own qualms about Facebook and libra and the shortcomings of Big Tech”. But, he added, “if history has taught us anything, it’s better to be on the side of American innovation”.

Mr Zuckerberg also heard rebukes about Facebook’s credibility broadly, which underpin many Washington policymakers’ concerns about its move into financial services. The company has been harshly criticised for its handling of users’ personal data and its role in the spread of misinformation.

Several politicians questioned Facebook’s ambitions to launch libra and whether it could safely manage to do so given its poor track record on handling user data and battling misinformation.

A number of Democrats asked Mr Zuckerberg about Facebook’s decision to exempt politicians from fact-checking and other community standards, and how those rules reconciled with Facebook’s stated desire to minimise false information on the platform.

At one point, the vice-chairwoman of the Congressional Black Caucus, Democrat Joyce Beatty, called the testimony “appalling and disgusting” after Mr Zuckerberg gave a halting answer about details of the company’s work with civil rights leaders.

“Have you learned that you should not lie?” asked Nydia Velazquez, another Democrat, pointing to a fine Facebook paid European regulators, who accused the company of providing misleading information.

Mr Zuckerberg said he disagreed with her characterisation, but added, “I understand that we have work to build trust on this”.

Facebook has said it would exempt politicians from fact-checks on the grounds that such comments are newsworthy.

The group of companies that Facebook assembled to launch libra, the Libra Association, has lost one-quarter of its original members, including Visa, Mastercard and PayPal since the June announcement. Those companies faced pressure to explain how libra could be prevented from being used to launder money or finance terrorism.