Lawmakers have begun actively pressuring members of the Libra Association, the international blockchain payments project led by Facebook, to reconsider their involvement with the group.
In a new letter sent to the CEOs of Visa, Mastercard, and Stripe, Sens. Brian Schatz (D-HI) and Sherrod Brown (D-OH) warn of enormous risks inherent in the Libra project, including facilitating criminal and terrorist financing and destabilizing the global financial system. The letter also suggests the companies would face increased oversight from financial regulators in their conventional, non-blockchain businesses if they continue with the association.
“This journey to build a generational payment network like the Libra project is not an easy path.”
“Facebook appears to want the benefits of engaging in financial activities without the responsibility of being regulated as a financial services company,” the letters read. “If you take this on, you can expect a high level of scrutiny from regulators not only on Libra-related activities, but on all payment activities.”
Republicans have also been skeptical of the project, with Sen. Josh Hawley (R-MO) describing it as Facebook “expanding their monopoly.”
As payment processors, all three companies face significant federal regulatory burdens, including from the Federal Trade Commission, Consumer Financial Protection Bureau, and the Department of Justice. Facebook is already facing growing scrutiny from those agencies — particularly the FTC, which reached a $5 billion settlement with the company earlier this year. None of the three payment processors immediately responded to a request for comment.
The letters come just days after PayPal’s withdrawal from the Libra Association. The company did not give a specific reason, but many have speculated that it was a response to heightened pressure from regulators.
“The Libra Association maintains its commitment to not launch until questions and concerns by regulators are addressed,” Libra Association policy chief Dante Disparte told The Verge. “This is enshrined in our long launch runway, which has helped inform regulators, policymakers and other stakeholders around the world about our commitment to responsible financial innovation and strong oversight.”
Thus far, the other Libra members have remained committed to the project, which is still in its early stages — but there will be plenty of opportunity to confront these issues in the coming month. The first official meeting of the Libra Association is scheduled to take place in Geneva on October 14th. Mark Zuckerberg is scheduled to appear before the House Financial Services the following week, on October 23rd, where the risks and benefits of Libra will be a central topic.
Update 12:14PM ET: Updated with new comment from the Libra Association and details of Mark Zuckerberg’s committee appearance.