Independent Banker - November 2019 - 68

and cryptocurrency allows for a layer of embedded security
by the nature of its construction. To that point, the Libra
Blockchain was set up with advanced programming, such
as the Move programming language, to address security
concerns. According to a white paper published by Libra,
this is designed to " take insights from security incidents
that have happened ... and create a language that makes
it inherently easier to write code that fulfi lls the author's
intent, thereby lessening the risk of unintended bugs or
security incidents. "
The white paper also discusses how transactions are
securely stored on the Libra Blockchain. But the very nature
of the Libra Blockchain as a single data structure that
records transaction history raises data protection issues.
Signifi cant concerns arise around the Bank Secrecy Act
(BSA) and anti-money laundering (AML). Without the
same level of regulatory scrutiny as traditional fi nancial
" Community banks need
to be aware of how
our customers will be
impacted by the issuance
of any cryptocurrency,
including Libra. "
-Jack Hartings,
Peoples Bank Co.
institutions, there is the potential for illicit activities to make
their way onto Libra, as we witnessed with the dark web
activity that became prominent with other cryptocurrencies.
" I hope that regulators and legislators are wary of the
claim that cryptocurrency somehow will be a boon for the
'unbanked,' " Kennedy says. " In truth, despite whatever
benefi t there may be to society, crypto is an ideal medium
for the type of illegal activity that community banks
currently expend an ever-increasing amount of resources
tracking for law enforcement. "
According to an emailed response from Dante Disparte,
the head of policy and communications for the Libra
Association, the Libra team is working through these
issues. " Regarding anti-fraud and AML, the association
is committed to working to address privacy and security
issues, " he says. " While we cannot share specifi c meeting
details, we have already met with policymakers and
68 Q ICBA Independent Banker Q November 2019
regulators and will continue to engage with these groups
and solicit feedback as we prepare to launch Libra. "
In his prepared testimony to the Senate Committee
on Banking, Housing, and Urban Aff airs at July's Libra
hearing, David Marcus, Facebook's head of Calibra,
reiterated that sentiment. " Protecting consumers and
ensuring people's privacy is one of the Libra Association's
top priorities, " Marcus said, but he provided little detail
on how they plan to accomplish that goal.
Regulators and legislators react
While the Libra Association has touted its commitment
to working with regulators and legislators, all signs from
those audiences point to this process being a longerterm
eff ort. Federal Reserve chairman Jerome Powell
responded immediately to the Libra announcement,
saying that it " raises many serious concerns regarding
privacy, money laundering, consumer protection and
fi nancial stability. "
" These are concerns that should be thoroughly and
publicly addressed before proceeding, " he added.
Legislators resoundingly concurred, fi nding a topic on
which both parties agreed. Rep. Maxine Waters (D-Calif.),
chairwoman of the House Financial Services Committee,
called on Facebook for a " moratorium on any movement
forward on developing a cryptocurrency until Congress
and regulators have the opportunity to examine these
issues and take action. " And Sen. Mike Crapo (R-Idaho),
chairman of the Senate Committee on Banking, Housing
and Urban Aff airs noted, " The Libra announcement has
heightened the need for policymakers and regulators to
establish clear rules of the road. "
This level of regulatory scrutiny is rumored to have
been behind October's mass exodus of Mastercard, Visa,
PayPal and other former Libra Association members.
The rumors were swirling as far back as August, when
the Financial Times reported that at least three of the
original 28 founding members were considering backing
out of the group out of an unwillingness to risk additional
compliance hurdles with their existing businesses.
Facebook, for its part, has been consistent in its
openness to collaborating with regulators and legislators
to address any concerns before launch. The company has
also testifi ed that the Libra Association plans to register
with FinCEN as a money services business.
" From the Calibra side, we know that the journey
to launching Libra will be a long one and that we
cannot do this alone, " Gunter says. " Engaging with
Independent Banker - November 2019

Table of Contents for the Digital Edition of Independent Banker - November 2019
