Facebook blockchain lead David Marcus told U.S. lawmakers that the social media giant plagued by privacy scandals won’t have access to personal financial information with its new cryptocurrency.
In a letter dated Monday to the Senate Banking Committee responding to pointed questions the lawmakers sent in May, Marcus took a diplomatic tone, acknowledging the panel’s concerns about data privacy and telling them:
“I want to give you my personal assurance that we are committed to taking the time to do this right.”
A similar letter was sent to the House Financial Services Committee, the Hill reported earlier Tuesday.
In the letter, which was printed on Facebook letterhead, Marcus said personal data would not be attached to any transactions conducted on the Libra blockchain.
“Similar to existing and widespread cryptocurrencies such as ethereum and bitcoin, transactions that take place directly on the Libra Blockchain are ‘pseudonymous,’ meaning that the user’s identity is not publicly visible,” he wrote, reiterating a promise Facebook has been making since it unveiled the Libra project last month.
The blockchain addresses in a transaction, a timestamp and the transaction amount will be public, but any know-your-customer (KYC) or anti-money-laundering (AML) information would have to be stored by the wallet providers.
As a caveat, Marcus noted that Libra will be an open-source platform, any third party developer will be able to build their own digital wallet.
These third parties would be responsible for how their Libra wallets are built, Marcus explained, saying “it will be the responsibility of these providers to determine the type of information they may require from their customers and to comply with regulations and standards in the countries in which they operate.”
He added:
“Regulators of Calibra and other digital wallet services can require them to collect information about the identity and activities of their users and make such information available to law enforcement and regulatory agencies, such as for AML, CFT [counter-financing of terrorism], and sanctions purposes.”
In response to questions about what sort of consumer financial information Facebook already has, Marcus wrote that a subsidiary of the social media giant (unrelated to Libra) stores “non-public personal financial information data,” such as payment credentials, in compliance with existing law for transactions, but that this information is not used for advertising or for personalization.
Moreover, because the Facebook Payments, Inc. subsidiary processes these transactions, Facebook itself does not have access to any payment credentials information, though it does collect other information affiliated with a transaction, such as the merchant, the transaction amount, the date and time and the purchased good.
Church and state
The Libra Association, Facebook’s governing council for its blockchain network, will have even less information than Facebook Payments does, Marcus told the senators.
Because validator nodes or wallets will process and store transactions, neither Facebook nor Libra will store personal data, he claimed.
Facebook set up a subsidiary to develop an open-source wallet for Libra, called Calibra. Marcus explained that “Calibra will be Facebook’s representative in the Association. As a separate, regulated subsidiary of Facebook, Calibra will safeguard consumer financial data and will not use or share this data for ad targeting purposes.”
As a custodial wallet, Calibra will maintain some consumer financial data, however.
“Aside from limited cases, Calibra will not share account information or financial data with Facebook or any third party without customer consent,” Marcus wrote.
Exceptions include data shared with law enforcement agencies or regulators in accordance with law for AML or CFT purposes, as well as in accordance with sanctions law.
“For example, Calibra customer account information and financial data will not be used to improve ad targeting on Facebook or across its family of social media and messaging products,” Marcus added.
In response to questions about individual credit ratings, Marcus wrote that “Facebook does not obtain or use consumer reports or credit scores for any purpose.”
Revealed last month, Facebook’s exhaustive plan to create a widespread payments system targeting unbanked individuals was immediately met with regulatory and legislative pushback. Lawmakers and other government officials worldwide have been questioning the project, if not outright calling for a moratorium on development.
The U.S. Senate Banking Committee is scheduled to hold a hearing on the project on July 16, with the House Financial Services Committee holding another the next day. Marcus will testify at both.
Marcus said in his letter Tuesday that the company had reached out to financial services firms, regulators, central banks, policymakers, treasury and finance ministry officials and other groups to discuss the project.
“The Libra Association will work with policymakers and regulators to make sure this new ecosystem is a value-add to economies, that consumers are protected, and that the role of government oversight and central banks is appropriate. The Association is fully committed to advancing the global dialogue on how blockchain and cryptoassets should be regulated.” he wrote.
Read the full letter to the Senate Banking Committee here:
2019.07.08 FB Letter to Sen… by on Scribd
David Marcus image via CoinDesk archives
https://www.coindesk.com/facebook-to-senators-libra-cryptocurrency-will-respect-consumer-privacy
