Facebook's cryptocurrency chief, David Marcus, met lawmakers for another day in a row Wednesday, this time appearing before the US House Financial Services Committee.
One of the more insightful exchanges then happened to freshman Rep. Alexandria Ocasio-Cortez had the microphone and asked Marcus about the financial reserve that supports Facebook's Libra digital currency.
Facebook has said that Libra will be backed by real financial assets, especially a "basket" of existing currencies, such as US dollars, euros and government securities – which will serve as the "currency" of the digital currency. To reassure Facebook concerns that control the currency, it has emphasized that Libra will be managed by a consortium of organizations.
But in a number of questions, Ocasio-Cortez pointed out that the assets that support the Libra currency that put their value will be determined by companies, most of which are pay driven.
"So we are discussing a currency governed by an undemocratically elected coalition of largely massive companies," New York Democrat said.
It is a potentially problematic issue, Ocasio-Cortez suggested, because a national currency is something that acts as a "public good" in government, not in profits. And it highlights an aspect of Libra that can become an obstacle to Facebook.
Here is the exchange between Ocasio-Cortez or AOC, and Marcus:
AOC: This control over the reserve is the Libra Association, right?
Marcus: Yes, it is congressional friend.
AOC: And currently, the Libra Association is ruled by Facebook, Uber, eBay, Spotify, Visa, Thrive Capital, Union Square Ventures, and a handful of nonprofit organizations, as well as some other partners, right?
Marcus: That's right.
AOC: Were they democratically elected?
Marcus: No, congressional friend, but we hope that we will get proper legal oversight, because we agree with you that this will have proper supervision to ensure correct ̵[ads1]1;
AOC: So who picked the founders of this control over the currency?
Marcus: Congressman, membership is open based on certain criteria. The first 27 other companies that have joined are the companies that have shared the desire to come and build this network.
AOC: I see. So we are discussing a currency controlled by an undocumented coalition of largely massive companies. Do you think currency is a public good?
Marcus: Congressman, I believe that sovereign currencies should remain sovereign, and we do not want to challenge sovereign currencies. We just want to increase their abilities in a way they can be –
AOC: But do you think currency is a public good?
Marcus: Congressman, I think sovereign currencies are sovereign, and as a result they should continue –
AOC: So do you think Libra should be a public good?
Marcus: Congressman, again, we will work with all the regulators and address all concerns, and the regulators will decide –
AOC: I take it as a no. I should take that as no?
Marcus: It is not for me to decide, congressional friend.
AOC: OK, I take it as a no.