As if Facebook’s Libra project wasn’t having enough problems, two U.S. Senators have publicly asked Mastercard, Visa, and Stripe to reconsider their involvement in the payment network.
In three letters sent to the companies’ CEOs, Senators Brian Schatz (D-HI) and Sherrod Brown (D-OH) warned Mastercard, Visa, and Stripe about the inherent risks Libra poses to consumers, financial institutions, and the global financial system. The senators urged the firms to “carefully consider” the 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.”
Facebook, which the senators call the “driving force behind Libra,” has yet to provide “a clear plan for how it will prevent Libra from facilitating criminal and terrorist financing, destabilizing the global financial system, interfering with monetary policy, or exposing consumers to risks currently limited to accredited investors,” the senators said.
Citing a recent New York Times article about the proliferation of child abuse, the lawmakers note that “12 million out of the 18.4 million reports of child sexual abuse photos and videos last year” were attributed to Facebook Messenger, adding that “it is chilling to think what could happen if Facebook combines encrypted messaging with embedded anonymous global payments via Libra.”
“If you take this on,” the senators said, “you can expect a high level of scrutiny from regulators not only on Libra-related payments activities, but on all payment activities.”
Mastercard, Visa, and Strip has yet to respond to the letter, but given that they’re already on the fence about going forward with Libra, they might answer by pulling out. PayPal, one of the founding members of the Libra Association, “made the decision to forgo further participation” in Libra last week after executives complained that Facebook “oversold” how regulators would view the cryptocurrency.
Photo: Thomas Kohler