Government & Politics

KC’s Cleaver to Zuckerberg on Facebook cryptocurrency plan: ‘This stuff scares me’

Facebook CEO Mark Zuckerberg met with Rep. Emanuel Cleaver Tuesday, ahead of a congressional hearing where the billionaire will face questions from lawmakers about his company’s cryptocurrency project.

Cleaver, a Kansas City Democrat, asked the Treasury Department in September to investigate Libra, a digital currency being developed by Facebook. He received a letter this week telling him the department was closely monitoring the product ahead of its launch.

“I’m concerned Libra will further the development of terror cells and money laundering,” Cleaver said in an interview with The Star minutes after his meeting with Zuckerberg concluded.

“I told him this stuff scares me.”

Zuckerberg will testify before the House Financial Services Committee Wednesday. Cleaver is a member of the panel and chairs the subcommittee that focuses on national security and monetary policy.

According to prepared remarks posted to the committee’s website, Zuckerberg will tell lawmakers that the company will not launch Libra until it obtains approval from U.S. regulators. But he also emphasized what he saw as the potential benefits.

“People pay far too high a cost—and have to wait far too long—to send money home to their families abroad. The current system is failing them. The financial industry is stagnant and there is no digital financial architecture to support the innovation we need,” Zuckerberg states in his written testimony.

“I believe this problem can be solved, and Libra can help.The idea behind Libra is that sending money should be as easy and secure as sending a text message. Libra will be a global payments system, fully backed by a reserve of cash and other highly liquid assets.”

Cleaver said Zuckerberg told him that every dollar would be backed up with Facebook’s currency. “He said his goal is to build a product that would not be involved in any kind of economic collapse,” Cleaver said.

Hours before his meeting with Zuckerberg, Cleaver posed a question about Libra to Treasury Secretary Steve Mnuchin at a hearing on an unrelated topic.

Mnuchin assured the congressman the Treasury Department is monitoring Libra’s potential 2020 launch and is making sure it has the necessary regulatory authority.

“I’ve met multiple times with the representatives of Facebook,” Mnuchin told Cleaver. “We’ve told them that we thought that their launch was premature, that they had not addressed fundamental issues around money laundering.”

Cleaver said that Zuckerberg, who was flanked by three staffers, knew every question that he had asked Mnuchin and all of Mnuchin’s responses when he sat down with the congressman Tuesday afternoon.

Zuckerberg’s meeting with Cleaver is part of a broader outreach effort by the CEO in the face of a growing backlash to the tech industry on Capitol Hill. It could have major ramifications for Facebook and other social media companies if lawmakers impose new regulations.

He met last month with Sen. Josh Hawley, R-Missouri, one of the most outspoken critics of the tech industry in the Senate.

Cleaver praised Zuckerberg’s self-awareness and said that he’s been responding to the scrutiny from lawmakers better than many business leaders would.

“He’s handling from my perspective the whole ‘Let’s beat up Zuckerberg’ thing quite well,” Cleaver joked.

“Obviously, he’s brilliant, but surprisingly he understands there are things that could have been done better.”

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Bryan Lowry covers Kansas and Missouri politics as Washington correspondent for The Kansas City Star. He previously served as Kansas statehouse correspondent for The Wichita Eagle and as The Star’s lead political reporter. Lowry contributed to The Star’s investigation into government secrecy that was a finalist for The Pulitzer Prize.
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