With Libra, developed by Facebook (FB), the goal is to create a universal currency and payments system that users can access from their smartphones. Shortly after its announcement in June, however, lawmakers around the world raised concerns about its implications for financial markets, cyber crime and consumer privacy, and those objections have only gotten louder.
Questions about whether Libra can stand up to regulatory scrutiny appear to be coming from both outside and inside the project’s inner circle. American lawmakers are now calling for Facebook’s top brass, CEO Mark Zuckerberg and COO Sheryl Sandberg, to testify on the project. Some legislators say they’re still considering ways to stop the cryptocurrency in its tracks.
“This Congress will make sure, one way or another, that we know what [Zuckerberg is] doing and whether or not it protects our consumers and our economy,” Rep. Sylvia Garcia, a Democrat from Texas, said on a call with reporters. “And if it doesn’t, we’ll make sure to stop it.”
The questions lawmakers have for Zuckerberg and Sandberg are fundamental and serious. They still struggle to understand exactly what Libra is and how it would work, but nonetheless are deeply concerned it could threaten the US dollar. They also worry Libra’s access to Facebook’s billions of users could give even more power to the social media giant.
“We need to get the message loud and clear to Mr. Zuckerberg that he’s not a country on his own and he can not always have it his way,” said Garcia, a member of the US House Financial Services Committee, which is calling for a hearing with Sandberg by the end of October and with Zuckerberg by January. Facebook declined to comment.
The opposition is not just coming from the US. European Union finance commissioner Valdis Dombrovskis told lawmakers Tuesday he plans to introduce legislation that would aim to stem Libra’s potential systemic risk to the euro and the possibility that it could be used for money laundering.
Libra is not only facing external pressures.
On Friday, PayPal (PYPL) became the first of the project’s founding partners to drop out of Libra’s governance organization, the Libra Association. PayPal pulling out is especially striking, given that David Marcus, head of the Libra effort at Facebook, formerly worked as PayPal’s president.
Fellow payments companies Visa (V) and Mastercard (MA) are considering following suit, for fear that the regulatory backlash Libra has attracted could turn on their own businesses, according to reports from the Wall Street Journal and multiple other outlets.
Visa and Mastercard declined to comment for this story. But during an interview with CNBC in August, Visa CEO Al Kelly stressed that the company had not yet officially committed to the Association. He said Visa would only sign on if Libra is able to “meet or exceed” the expectations of regulators.
A lack of commitment from within the Libra Association could pose a problem for the project. The…
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