Facebook's cryptocurrency Libra attacked during a hearing in the Senate

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Reuters

Facebook's plan for a cryptocurrency has been attacked again at a hearing in the United States, politicians describing the company as "delusional" and not having confidence.

The Senate banking committee questions David Marcus, head of Facebook, about the technology giant's intention to launch his Libra digital currency.

The company had shown "scandal after scandal that she did not deserve our trust," said Senator Sherrod Brown.

Facebook was asked to clean its house before launching a new business model.

The company announced last month its intention to launch a digital currency, probably next year, but it must first convince Washington lawmakers to take sides.

But since the plan was unveiled, critics have lined up to express their skepticism, including US President Donald Trump.

Mr. Brown, a Democrat, told the audience, "We would be crazy to give them a chance to let them experiment with people's bank accounts." He thought it was "delusional" to think that individuals would trust the social media company with their "hard-earned" money.

Other senators shared his concerns. "I do not trust you," said Republican Senator Martha McSally. "Instead of cleaning your house, you are embarking on a new business model."

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Mr. Marcus, president of PayPal from 2012 to 2014, tried to dispel the concerns in his opening remarks by promising that Facebook would not start offering Libra until the regulatory problems were resolved.

"We know we need to take the time to get it right," said Marcus, who is also due to appear before the House Financial Services Committee on Wednesday.

US Treasury Secretary Steven Mnuchin said on Monday that he was "uncomfortable" with Libra, while last week the US Federal Reserve chief, Jerome Powell, also expressed his concerns.

Senators at Tuesday's hearing raised questions such as how Facebook was planning to prevent money laundering through the new payment system and the protection of consumer data and funds.

"I know we have to earn the trust of people for a very long time," Marcus said.

The social media company has committed Libra – the purportedly independent money management organization – to share customer data with Facebook and external third parties only if it consents, or "limited cases", if necessary.

Mr. Marcus told the audience, "Our method is to separate social and financial data because we heard loud and clear that they did not want these two types of data flows to be connected. This is how the system is designed.

"Facebook will only have one vote and will not be able to control the badociation. Neither Facebook nor the Libra badociation will position themselves to compete with sovereign currencies or meddle in the monetary policy, "he said.

One of the complex issues here is the difference between Libra – the crypto-currency platform, which is open source – and Calibra, the Facebook-specific service called portfolio, which it builds on infrastructure. Libra. David Marcus can honestly tell senators that Libra is a democratic and open system over which Facebook has no control.

But this is not the complete picture: Calibra a lot is the product of Facebook, and by virtue of the fact that it will be supported by the largest and most powerful social network in the world, it will become the dominant force in the global cryptocurrency. As one senator said, "you do not do it for fun". Expect a closer look at how Facebook will use its power to push Calibra to come soon.

All of this week's hearings focus on whether technology giants have too much power over their competitors, freedom of expression, and perhaps the future of the global banking system.

Facebook's Marcus has warned against another warning that we often hear repeated at other hearings: if these Silicon Valley giants are not allowed to innovate, others will. Of course, it means China, where technology companies are considering their own cryptocurrency projects.

This could be a good example – Facebook and its counterparts in Silicon Valley may not be highly valued by Washington at the moment, but it could be the lesser of two ills.