Democratic senators Sherrod Brown of Ohio and Brian Schatz of Hawaii wrote letters to Visa, Mastercard and Stripe asking that the firms rethink their membership in Facebook’s Libra Association, Bloomberg reported on Tuesday (Oct. 8).
The senators said that Libra is a risk to the payments business and to global financial networks. The legislators pointed to news articles that indicate Libra’s lack of transparency.
Banking Committee member Brown and panel member Schatz told Bloomberg their letter indicated that “Congress, financial regulators, and potential Libra Association member companies have struggled to get sufficient details from Facebook about risks that Libra may pose, including facilitating criminal and terrorist financing, destabilizing the global financial system, interfering with monetary policy, or exposing consumers to risks currently limited to accredited investors.”
PayPal left Libra on Oct. 4. The association is now comprised of 27 member firms, including Uber and Coinbase.
“We urge you to carefully consider how your companies will manage these risks before proceeding, given that Facebook has not yet demonstrated to Congress, financial regulators — and perhaps not even to your companies — that it is taking these risks seriously,” the senators’ letter said.
“Facebook is currently struggling to tackle massive issues, such as privacy violations, disinformation, election interference, discrimination, and fraud, and it has not demonstrated an ability to bring those failures under control. You should be concerned that any weaknesses in Facebook’s risk management systems will become weaknesses in your systems that you may not be able to effectively mitigate.”
The launch of Libra ignited a global debate over the role of cryptocurrencies in payments and financial services.
Some central bankers have expressed interest in creating digital fiat currencies – and one country, China, says it’s ready to launch its own version of Libra.
Others have used the occasion of Libra’s launch to further elevate the threat of money laundering and the potential for financial crimes, specifically focusing on crypto and more generally examining cross-border money movement.
We’re always on the lookout for opportunities to partner with innovators and disruptors.
Learn More