Facebook's Libra project unravels further as US lawmakers urge Visa and Mastercard to quit

Charlie WoodOct 9, 2019, 16:55 IST

Christophe Morin/IP3/Getty Images

Facebook CEO Mark Zuckerberg.

Two Senate Democrats have reportedly urged Visa, Mastercard and Stripe to reconsider their involvement with Facebook's Libra cryptocurrency project.
According to Bloomberg, Senator Sherrod Brown of Ohio and Senator Brian Schatz of Hawaii wrote to the 3 firms warning that their involvement poses risk to the global financial system and to the firms themselves.
On Tuesday, PayPal became the first company to leave the Libra Association, the group of companies who hope to roll out the cryptocurrency by June 2020.
Facebook, Visa, Stripe, Mastercard and the Libra Association did not immediately respond to Business Insider's request for comment.
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Facebook's Libra cryptocurrency project is beginning to unravel.

First Bloomberg reported that Mastercard, Visa and Stripe are being urged to reconsider their involvement with the project. Then The Telegraph reported that Facebook Libra group head Simon Morris had left in August, confirmed by Morris' LinkedIn profile.

Libra is intended to be a new digital currency that would work with online purchases and digital money transfers. It was conceived by Facebook, but the idea is that Libra will be led by a group of different firms via the non-profit Libra Association. The goal is a 2020 rollout.

Visa, Mastercard, and Stripe are three of the 27 Libra Association members. Two Senate Democrats - Senator Sherrod Brown of Ohio and Senator Brian Schatz of Hawaii - have written a letter to the three payment processing firms, reportedly warning that Libra poses a risk to the global financial system.

The senators' letter appears to capitalize on a Wall Street Journal report which said both Visa and Mastercard were reconsidering their involvement with Libra. That report also said some Libra Association members were concerned about getting hold of details about how the organisation would be run and the risks of keeping the currency secure.

The senators' letter reads, according to Bloomberg: "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."

Getty

PayPal has stopped its participation in the Libra Association (pictured is PayPal CEO Dan Schulman.)

Facebook itself has hit back at reports that it's failing to share detailed information with partners.

Still, it's yet another roadblock in Libra's short history.

Though the project was only announced in June, PayPal became the first firm to leave the Libra Association on Tuesday despite claiming it "remains supportive of Libra's aspirations."

And there's been a chorus of dissent from politicians around the world. In July, President Donald Trump tweeted that Libra will have "little standing or dependability."

Democratic representative Rashida Tlaib has asked if the project aims to form a "crypto mafia" of mutually self-interested companies.

The European Union began a formal investigation of Libra over potential competition concerns in August, while the French finance minister Bruno le Maire said France "cannot authorize" Libra's development in Europe over consumer risk concerns. In the last 24 hours, Vodafone has reportedly called on the association to appoint an independent chief executive to separate it from Facebook.

Facebook, the Libra Association, Mastercard, Visa and Stripe did not immediately respond to Business Insider's requests for comment.