Senators strong-arm Visa, Mastercard, and Stripe on Libra: “…expect a high level of scrutiny.”
Facebook’s Libra stablecoin project received another jolt when US Senators wrote an “or…else” letter to certain Libra Association members.
Senators Brian Schatz (D-HI) and Sherrod Brown (D-OH) wrote to the CEOs of Visa, Mastercard, and Stripe, urging them to be wary of their participation in Facebook’s Libra Association.
The Senators said vital questions remained unanswered about the risks posed by Libra. Affected entities could include consumers, regulated financial institutions, and the global financial system.
“We urge you to carefully consider how your companies will manage these risks before proceeding…,” the letter said.
Facebook’s Messenger used in child sexual abuse?
The letter alleged Facebook had been unable to control issues in its core business lines. Moreover, it was still struggling to resolve privacy violations, disinformation, interference in elections, and fraud.
Further, they claimed Facebook’s Messenger routed the majority of reports of child sexual abuse media around the world last year.
“It is chilling to think what could happen if Facebook combines encrypted messaging with embedded anonymous global payments via Libra,” they wrote. “Your companies should be extremely cautious about moving ahead with a project that will foreseeably fuel the growth in global criminal activity.”
“If you take this on, you can expect a high level of scrutiny from regulators not only on Libra-related payment activities but on all payment activities,” the letter warned.
The letter is further suggesting that Visa, Mastercard, and Stripe would face heightened regulatory attention in their core, non-crypto payments business. Perhaps, it is a hint they should discontinue their association with the Libra project.
The three payments processors already have a significant regulatory load from the FTC, CFPB and the Justice Department.
Fresh roadblock for Facebook, Libra Association
Finally, the letters could spark defections anew from Facebook’s Libra Association. Payments giant PayPal quit Tuesday, ostensibly to focus on its core business.
Further, according to The Telegraph, Simon Morris, the Libra Association’s head of product and a key figure, departed the Switzerland-headquartered body in August.
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