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Lawmakers are starting to pressure members of the Libra Association to reconsider their involvement in the Facebook-led Libra cryptocurrency project.
In a letter, Senators Brian Schatz and Sherrod Brown urged Visa, Mastercard, and Stripe “to proceed with caution” over their involvement in the Libra project. The lawmakers said Facebook failed to provide satisfactory answers on regulatory concerns over terrorism, money laundering, monetary policy, and economic destabilization.
“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 letter states.
“Facebook appears to want the benefits of engaging in financial activities without the responsibility of being regulated as a financial services company,” they said.
The letter also appears to threaten the companies to expect increased oversight from financial regulators in their non-blockchain businesses should they intend to continue to be a part of the organization.
“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,” the letter read.
The letter appears to capitalize on a previous report by The Wall Street Journal that both Visa and Mastercard were reconsidering their participation with Libra. Earlier this week, PayPal became the first company to withdraw from the Libra Association. A previous report by the Financial Times revealed that Facebook’s lack of attention on the considerable scrutiny and how the firm will tackle money-laundering activities are some of the reasons the digital payments firm decided to call it quits.
Just recently, the European Union’s financial services commissioner Valdis Dombrovskis also revealed his plans to create a new regulatory framework for cryptocurrencies, particularly Facebook’s Libra stablecoin.
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