Facebook’s plan to launch Libra came under further pressure after its partners Visa, Mastercard, Paypal, and Stripe announced that they were leaving the digital currency project. And as it turned out, there was some political pushing involved.
Senator Brian Schatz (D-HI) and Sherrod Brown (D-OH) sent letters to the chief executive officers of Visa, Mastercard, and Stripe, wherein they asked the trio to quit Facebook’s Libra project. The politicians iterated that the social media giant had failed to respond to regulatory concerns related to money laundering, terrorist financing, economic stability, and monetary policy. They further reminded the executives about Facebook’s track of record of misusing users’ data.
“Your companies should be extremely cautious about moving ahead with a project that will foreseeably fuel the growth in global criminal activity,” the senators wrote.
The language turned threatening as both Schatz and Brown warned Visa CEO Alfred F. Kelly Jr., Stripe CEO Patrick Collinson, and Mastercard CEO and president Ajaypal Singh Banga of consequences should they not quit Libra. The senators intimidated the trio that they would impose additional scrutiny if they decide to move against their recommendations.
“If you take this on, you can expect a high level of scrutiny from regulators not only on Libra-related payment activities, but on all payment activities,” they wrote.
Coinbase CEO Bashes US Senators
Facebook did not provide any statement on the matter. But Brian Armstrong, the chief executive of San Francisco-based Coinbase cryptocurrency exchange, strongly objected to the way lawmakers went after Libra members. In a thread published on Sunday, Armstrong called the senators’ behavior “un-American,” adding that they both were resorting to “intimidation tactics.”
“[It] doesn’t matter what you think of Libra. If it’s not a useful tool or innovation, people won’t use it. Why the need for the intimidation tactics? This would be called anti-competitive/monopolistic behavior if any private company did it,” – Armstrong tweeted.
“Do we want to have a centrally planned economy, or let 1,000 ideas be tried in a free market to see which ones break through and deliver real value? Breakthroughs are by definition contrarian ideas, otherwise they would have already have been tried.”
Avivah Litan, vice president at Gartner Research, raised similar concerns. In her interview with CNBC, the analyst noted that governments are afraid of losing their authority to emerging technology projects like Libra. She also mentioned bitcoin, a non-sovereign asset, for scaring governments with its potential to replace all their monopoly.
“In the case of Libra, you replace central authority with task force authority and big tech authority. In the case of Bitcoin, you just replace all central authority,” said Litan.
Governments are threatened by both Libra & Bitcoin, says @avivahl. "In the case of Libra you replace central authority with task force authority and big tech authority. In the case of Bitcoin you just replace all central authority." pic.twitter.com/KpEV4CR17V
— Squawk Box (@SquawkCNBC) October 14, 2019