What constitutes government overreach? Some would say the letters U.S. Senators Brian Schatz and Sherrod Brown recently sent to MasterCard, Visa and Stripe, threatening more scrutiny if the major payment companies remained partners in the planned "Libra" digital currency project.
“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,” wrote the senators. “Facebook appears to want the benefits of engaging in financial activities without the responsibility of being regulated as a financial services company.”
The senators’ comments appeared to make their mark, with Stripe, Visa, PayPal, MasterCard and others dropping out of the Facebook-led Libra Association soon after, reportedly citing that threat of additional scrutiny. But commentators have suggested the senators overstepped their mandate and are suppressing innovation, even amid a continuing global outcry over the Libra project.
U.S. Treasury Secretary Steven Mnuchin was quick to dismiss the critics yesterday, speaking on CNBC’s SquawkBox. “I’ve met with the representatives of Libra multiple times,” he said. “We’ve been very clear with them—you can call that ‘threatening’—that if they don’t meet the highest [money laundering standards]...then we will take enforcement actions against them. And I think they realized they’re not up to par and some of the members dropped out until they meet those standards.” Read More...