(Bloomberg) -- Two Senate Democrats are urging three payment processing companies to reconsider their involvement with the Libra cryptocurrency project envisioned by Facebook Inc. and a coalition of other groups.
Libra poses risks not only to global financial systems, but also to the companies’ broader payments business, Senator Sherrod Brown of Ohio and Senator Brian Schatz of Hawaii said in letter on Tuesday to Visa Inc., Mastercard Inc. and Stripe Inc.
In the letter, the lawmakers cited news reports on the difficulty some of Libra Association members have faced in obtaining details on the organization’s management and risks.
The association is composed of a group of 27 members including Facebook and the payments companies, as well as a swath of tech companies like Uber Technologies Inc., telecom providers Iliad SA and Vodafone Group PLC, and cryptocurrency companies like Coinbase, Inc.
PayPal, Inc., one of the original members, confirmed it had left the organization on Oct. 4.
In a statement, Brown, the senior Democrat on the Banking Committee, and Schatz, a panel member, said they pointed out in the letter that “Congress, financial regulators, and potential Libra Association member companies have struggled to get sufficient details from Facebook about risks that Libra may pose, including facilitating criminal and terrorist financing, destabilizing the global financial system, interfering with monetary policy, or exposing consumers to risks currently limited to accredited investors.”
“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,” they said in the letter.
“Facebook,” the senators added, “is currently struggling to tackle massive issues, such as privacy violations, disinformation, election interference, discrimination, and fraud, and it has not demonstrated an ability to bring those failures under control.”
“You should be concerned,” Brown and Schatz said, “that any weaknesses in Facebook’s risk management systems will become weaknesses in your systems that you may not be able to effectively mitigate.”
A spokeswoman for MasterCard declined to comment. Representatives for Stripe, Visa, Facebook and the Libra Association did not immediately respond to requests for comment.
In July, both Republican and Democratic senators had pointed questions for Facebook at a Banking Committee hearing over its digital currency plans. That session reflected the skepticism across Washington and underscoring the challenges the company faces in getting Libra off the ground.
--With assistance from Kurt Wagner, Julie Verhage and Jenny Surane.
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