The Senate has urged Visa, Mastercard, and Stripe to review their involvement in the Libra cryptocurrency project led by Facebook Inc. and a coalition of other groups.
Risks of the Libra project
Senators Brian Schatz and Sherrod Brown have announced that the Facebook project presents too many risks for both large-scale payment firms and financial systems as a whole. In the letter, lawmakers referred to the difficulties Libra members face when trying to obtain detailed information about managing the organization and the risks involved:
“Congress, financial regulators, and potential Libra member companies have been trying hard to get information about risks from Facebook, including promoting crime and terrorism financing, destabilizing the global financial system, interfering with monetary policy, or putting consumers at risk that is now being limited to accredited investors.”
According to the senators, Facebook does not take these risks seriously enough because it has not demonstrated its proactive stance on overcoming them to Congress or the US financial regulators. Some of Libra’s pressing issues are privacy, discrimination, misrepresentation, and fraud, which the project is only trying to address, still unable to exercise full 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,” said Brown and Schatz.
Visa, Mastercard, and Stripe have not officially confirmed their participation in the Libra project. MasterCard and Visa refused to comment on the letter. At the same time, Stripe and Facebook do not hurry to answer.
In June, Facebook unveiled an ambitious plan to create its cryptocurrency called Libra, which will give 2 billion users access to financial services. Authorities around the world did not like this kind of idea. They may reject the project.