Tech

Treasury Secretary Mnuchin says libra backers dropped out because the project is 'not ready' to meet regulatory standards

Key Points
  • On Friday, Visa, Mastercard, Stripe, eBay and Mercado Pago joined PayPal in announcing they would no longer be part of Facebook's libra cryptocurrency.
  • Treasury Secretary Steven Mnuchin says he told libra representatives he would take action if the cryptocurrency didn't meet regulatory standards.
  • Mnuchin tells CNBC he thinks some libra backers "realized that they're not ready, they're not up to par."
Secretary of the Treasury Steven Mnuchin answers questions from the press after an interview on CNBC on the North Lawn of the White House in Washington, September 12, 2019. REUTERS/Sarah Silbiger.
Sarah Silbiger | Reuters

After six corporate backers of Facebook's libra cryptocurrency dropped out of the project, Treasury Secretary Steven Mnuchin said Monday he thinks those companies may have feared government enforcement action.

In an interview on CNBC's "Squawk Box," Mnuchin said he met with libra representatives on multiple occasions and has been "very clear ... that if they don't meet ... our money-laundering standards and the standards that we have at [Financial Crimes Enforcement Network] that we would take enforcement actions against them. And 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."

On Friday, five more corporate backers joined PayPal in exiting the Libra Association, the nonprofit developed to govern the new cryptocurrency envisioned by Facebook. Visa, Mastercard, Stripe, eBay and Mercado Pago all announced they no longer intended to participate in the program, which originally had 28 corporate backers. The loss of five payments companies could be a particularly large blow to the project, which is already facing scrutiny from governments around the world. The announcements came before the first Libra Association Council meeting in Geneva on Monday.

Officials at the Treasury Department are not the only ones looking closely at libra. The House Financial Services Committee has called on Facebook CEO Mark Zuckerberg to testify on Oct. 23, his first time returning for an open congressional testimony since 2018, when he discussed the Cambridge Analytica scandal. Lawmakers were still left with questions after libra project lead David Marcus testified in July. Several representatives encouraged Facebook to abandon its plans until sufficient regulatory mechanisms were in place, but Facebook has not made such a firm commitment, though it said it does plan to address concerns from lawmakers.

Reached for comment, a Visa spokesperson pointed to the company's statement on Friday announcing that it would no longer join the Libra Association. In the statement, the spokesperson 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."

Facebook, libra and the five other former corporate backers did not immediately respond to requests for comment.

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