Dive Brief:

• Lawmakers questioned Facebook on Libra's vulnerability to money laundering during a much-anticipated Senate Banking Committee hearing Tuesday. Lawmakers both supportive and wary of the launch of the new cryptocurrency were concerned over how the social media giant plans to limit "bad actors" from using the platform.
• David Marcus, head of Facebook's Calibra Project, the digital wallet, told lawmakers on Capitol Hill users will be required to submit a government-issued ID to open a Calibra wallet. "We have systems in place and a dedicated team to prevent fraudulent activity and money laundering," he said during the hearing.
• Marcus said the Calibra association is also in talks with the Financial Crimes Enforcement Network to ensure the wallet complies with the Bank Secrecy Act.

Dive Insight:

Although some senators shared their optimism and support for Facebook's cryptocurrency ambitions, many expressed concern over the company's growing power. Facebook has close to 2 billion members on its platform.

"Facebook is dangerous," Senate Banking Committee ranking member Sherrod Brown, D-OH, said in his opening statements. "They don't respect the power of the technology. They are like a toddler who got his hands on book of matches."

Sen. Martha McSally, R-AZ, told Marcus she didn't trust the company, referencing its "repeated deceit and violations."

Facebook's social responsibility has come under fire stemming from its connection to the Cambridge Analytica scandal. Cambridge Analytica mined Facebook user data to influence voter opinion ahead of the 2016 election.

Facebook was fined $5 billion by the Federal Trade Commission this week for privacy violations connected to the scandal.

Treasury Secretary Steven Mnuchin on Monday called the Libra proposal a national security issue, adding he is concerned Libra could be misused by money launderers and terrorist financiers.

"Cryptocurrencies, such as bitcoin, have been exploited to support billions of dollars of illicit activity like cybercrime, tax evasion, extortion, ransomware, illicit drugs, human trafficking," he said during a press conference. "Many players have attempted to use cryptocurrencies to fund their malign behavior."

As senators challenged Marcus on the company's growing power and trust issues, he was adamant the currency would not launch before satisfying the concerns of regulators.

"We will take the time to get this right," he said. "We don't want this thing we are creating to be a tool for [money laundering]."