Senators warn Visa, Mastercard about joining Facebook-backed Libra Association

Libra could potentially facilitate criminal and terrorist financing, destabilize the global financial system or expose consumers to risks currently limited to accredited investors, according to a pair of U.S. senators.

Senators Sherrod Brown, of Ohio, and Brian Schatz, of Hawaii, who are both members of the Senate Banking Committee, sent letters to the CEOs of Visa, Mastercard and Stripe this week expressing concern about their companies’ participation with the Facebook-backed Libra Association.

“We are concerned because key questions remain unanswered about the risks the project poses to consumers, regulated financial institutions and the global financial system,” the senators wrote. “We urge you to carefully consider how your companies will manage these risks before proceeding.”

The Libra Association is a Geneva-based group that plans to oversee a future cryptocurrency called Libra and a crypto platform called Calibra. Facebook announced the creation of the association and its plans in June, saying it had lined up partners from a variety of business fields.

The senators said companies joining the Libra Association should proceed with caution until Facebook can provide better answers about the risks the cryptocurrency could pose.

“Facebook 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,” the senators wrote. “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.”

Dante Disparte, head of policy and communications for the Libra Association, said that the group “maintains its commitment to not launch until questions and concerns by regulators are addressed.”

“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,” Disparte said.

Representatives from the three companies didn’t immediately say whether they were rethinking their participation in the Libra Association.

Some companies have reportedly had second thoughts about working with the Libra Association following scrutiny from regulators and concerns about public backlash.

Facebook CEO Mark Zuckerberg's face is visible on a mock "Zuck Buck" depicted on a screen as David Marcus, CEO of Facebook's Calibra digital wallet service, foreground, is questioned by Rep. Brad Sherman, D-Calif., during a House Financial Services C (AP)

On Friday, PayPal announced it was no longer participating with the group.

“We remain supportive of Libra’s aspirations and look forward to continued dialogue on ways to work together in the future,” PayPal said then in a statement to FOX Business.

The Libra Association responded to the news on Twitter, writing that each organization participating would “have to make its own assessment of risks and rewards of being committed to seeing through the change that Libra promises.”

Disparte said more than 1,500 entities have reached out to the Libra Association about joining.

“Our mission of financial inclusion enjoys broad global support,” Disparte said.