Some lawmakers are voicing concern about the Libra cryptocurrency project being pushed by Facebook. Libra, a blockchain-based digital currency, was originally being overseen by a 28-member nonprofit organization formed in June 2019 consisting of many of the largest players in the payments ecosystem. This consortium was to shepherd the cryptocurrency’s creation and eventual consumer rollout. The partner association is now at 27 organizations after a recent pull out by PayPal.
Further, Democratic Senators Sherrod Brown of Ohio and Brian Schatz of Hawaii said in letter this week to Visa, Mastercard and Stripe that each should reconsider their involvement with the project due to concerns over risks the system poses to the payments business and to global financial networks.
Libra, which is slated for launch in 2020, has not been transparent enough, according to the lawmakers, who noted potential risks of facilitating criminal and terrorist financing that the system could pose.
“We urge you to carefully consider how your companies will manage these 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,” the senators’ letter said.
PayPal announced it had pulled out of Libra earlier this month. The company did not offer a reason, but said in a statement to The Verge that it decided “to forgo further participation in the Libra Association at this time and to continue to focus on advancing our existing mission and business priorities as we strive to democratize access to financial services for underserved populations.”
However, a report in the Financial Times recently said PayPal was distancing itself from Libra due to regulatory scrutiny.
Since the advent of Bitcoin, digital currencies have offered merchants the potential for a low-cost online payment method that protected them from chargebacks. This promise, however, has been overshadowed by regulatory concerns and price volatility—concerns that Libra has not been able to shake.