Two Senate Democrats are urging three payment processing companies to reconsider their involvement with the Libra cryptocurrency project envisioned by Facebook Inc. and a coalition of other groups.
Libra poses risks not only to global financial systems, but also to the companies’ broader payments business, Senator Sherrod Brown of Ohio and Senator Brian Schatz of Hawaii said in letter on Tuesday to Visa Inc., Mastercard Inc. and Stripe Inc.
In the letter, the lawmakers cited news reports on the difficulty some of Libra Association members have faced in obtaining details on the organization’s management and risks.
The association is composed of a group of 27 members including Facebook and the payments companies, as well as a swath of tech companies like Uber Technologies Inc., telecom providers Iliad SA and Vodafone Group Plc, and cryptocurrency companies like Coinbase, Inc.
PayPal, Inc., one of the original members, confirmed it had left the organization on Oct. 4.
In a statement, Brown, the senior Democrat on the Banking Committee, and Schatz, a panel member, said they pointed out in the letter that “Congress, financial regulators, and potential Libra Association member companies have struggled to get sufficient details from Facebook about risks that Libra may pose, including facilitating criminal and terrorist financing, destabilizing the global financial system, interfering with monetary policy, or exposing consumers to risks currently limited to accredited investors.”
“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,” they said in the letter.
“Facebook,” the senators added, “is currently struggling to tackle massive issues, such as privacy violations, disinformation, election interference, discrimination, and fraud, and it has not demonstrated an ability to bring those failures under control.”
“You should be concerned,” Brown and Schatz said, “that any weaknesses in Facebook’s risk management systems will become weaknesses in your systems that you may not be able to effectively mitigate.”
Spokesmen for Mastercard, Visa and Stripe declined to comment. Facebook referred a request for comment to the Libra Association.
“The Libra Association maintains its commitment to not launch until questions and concerns by regulators are addressed,” Libra Association spokesman Dante Disparte said in a statement. “This is enshrined in our long launch runway, which has helped inform regulators, policy makers and other stakeholders around the world about our commitment to responsible financial innovation and strong oversight.”
Disparte said more than 1,500 organizations have reached out to the association about joining.
In July, both Republican and Democratic senators had pointed questions for Facebook at a Banking Committee hearing over its digital currency plans. That session reflected the skepticism across Washington and underscoring the challenges the company faces in getting Libra off the ground.