Steven Mnuchin speculated on what may have caused the latest blow to Facebook Libra’s ambitions. The proposed digital currency saw more of its corporate backers withdraw support, in what is being seen as a major setback.
This came just weeks after one of Libra’s biggest backers PayPal announced its withdrawal of support. Five corporate backers of Libra followed in PayPal’s footsteps, which include, Mastercard, Visa, Stripe, Mercado Pago, and eBay. In light of this, the secretary of the treasury Steven Mnuchin speculated that the five corporate backers may have feared more government enforcement action.
In an interview with CNBC’s squawk Box, Mnuchin said that he had met with Libra representatives on a few occasions where very candid discussions were held. Mnuchin said that he had made it clear to the Libra representatives, that if they don’t meet the money laundering standards in place and those of the financial crimes enforcement Network, enforcement actions would be taken against them. Mnuchin went on to speculate on what might have gone on in the minds of the Libra representatives.
“I think they realized that they’re not ready, they’re not up to par. And I assume some of the partners got concerned and dropped out until they meet those standards.”
This presents another hurdle for the Libra association as they race against time to have this digital currency unveiled next year. The loss of five corporate payment sponsors could prove a big blow to a project that is dealing with a lot of domestic and international scrutiny. Libra has faced major opposition from the French and German governments especially. The two governments see the digital currency as a potential threat to their monetary sovereignty and a possible parallel currency that will compete with their currencies.
The Libra has also taken a lot of heat from the US congress as well. A letter from the chair of Congressional financial services committee, Maxine Waters back in July instructed Facebook to halt all Libra development activities. The house of financial services committee has called on Facebook CEO Mark Zuckerberg to testify on October 23, after Libra project lead David Marcus’ presentation back in July left house members with more questions than answers.
Several lawmakers have advised Facebook to shelf the Libra plans until all the regulatory mechanisms have been put in place. Facebook has been non-committal on that, though it said that it would address all lawmaker concerns. When asked about the decision to leave the Libra association, a Visa spokesman said,
“We will continue to evaluate and our ultimate decision will be determined by a number of factors, including the Association’s ability to fully satisfy all requisite regulatory expectations.”
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