Secretary of US Treasury Gives Reason For The Firms Quitting Facebook’s Libra

Recently Mastercard, Visa, eBay have quit Facebook’s cryptocurrency project Libra. Steven Mnuchin, the United States Treasury’s secretary has given reasons for abandoning on CNBC’s Squawk Box. 

He believes that the firms quit Libra because they also realised that if Libra would not meet the standards then, they know that the government of the US would press criminal charges against them.

He says, “If they don’t meet the standards of our money-laundering standards and the standards that we have at FinCEN, we would take enforcement actions against them. I think they realized that they are not ready, they are not up to par and I assume some of the partners got concerned and dropped out until they meet those standards.” 

Five of the firms Mercado Pago, Visa, eBay, Stripe, and Mastercard announced their departures from Facebook’s Libra on Friday. The news has come after PayPal announced its exit and said that it is “supportive of Libra’s aspirations and look forward to continued dialogue on ways to work together in the future”. Last week, two US senators Sherrod Brown and Brian Schatz sent letters to Visa, Mastercard, and Stripe asking them to reconsider the alliance with Facebook’s Libra.

The letter said, “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 added, “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.”

Brian Armstrong, the CEO of Coinbase has however criticised the senators for sending letters to the firms – Visa, Mastercard, and Stripe saying, “Something feels very un-American about this. Two senators writing to Visa, Mastercard, and Stripe to ask them to withdraw from Libra,”