Cryptocurrency

GOP congressman: Libra hearing is 'American innovation on trial' by lawmakers who don't get it

Key Points
  • Rep. Patrick McHenry says he's concerned that the hearing on the Facebook-backed cryptocurrency libra will stifle innovation.
  • McHenry is the ranking member on the House Financial Services Committee, where Facebook CEO Mark Zuckerberg has been called to testify Wednesday on the libra project.
  • "My fear is that we now have American innovation on trial by policymakers here on Washington because they don't understand it," McHenry says.
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Rep. McHenry explains why congress is focused more on Facebook's libra than bitcoin

Republican Rep. Patrick McHenry told CNBC on Wednesday he's concerned that the hearing on the Facebook-backed cryptocurrency libra will stifle innovation.

"My fear is that we now have American innovation on trial by policymakers here in Washington because they don't understand it," the North Carolina congressman said on "Squawk Box."

McHenry is the ranking member on the House Financial Services Committee, where Facebook co-founder and chief executive officer Mark Zuckerberg has been called to testify Wednesday morning on the libra project.

"Because they're a big company doing this type of innovation, you have American policymakers trying to pounce on them," McHenry added. "This also sends a chilling signal to innovation in the United States."

In prepared remarks, Zuckerberg told lawmakers the digital coin "will extend America's financial leadership as well as our democratic values and oversight around the world."

Libra will not be run by Facebook, but rather by a nonprofit association of a range of companies and organizations.

McHenry, who called for a hearing on the matter, has been careful to stress that he isn't prejudging the social media giant and its proposal ahead of congressional hearings.

"What I'm asking for is a hearing on what they're proposing with Project Libra and the consortium that they've built around the world, how they are going to utilize it, the opportunity and the intention that they have," he told CNBC in June.

He reiterated those claims ahead of Wednesday's hearing, saying that legislators shouldn't rush to conclusions. "Let's be measured in our approach," he said. "It may not even work. The technology is simply a white paper at this point."

Libra, which was announced in June, aims to launch in the first half of 2020.

The Libra Association has 21 members, including Facebook, Uber and Lyft, each with a single voting power. However, Visa, Mastercard, Stripe, eBay, Booking Holdings and Mercado Pago recently abandoned the project, which faces regulatory scrutiny.

The goal of the association — using blockchain, the technology underlying bitcoin on other cryptocurrencies — is to make it as easy to send money across the world as it is to send a photo. But unlike bitcoin and others, libra would be backed by more stable government-backed money.