Seven of the Libra Association’s 28 “founding member” companies have now exited the Facebook-led cryptocurrency consortium amid months of regulatory scrutiny on Facebook and its launch plans. PayPal was the first to drop out, earlier in October; Visa, Mastercard, Stripe, eBay, and Mercado Pago all followed on Friday; and on Monday, Booking Holdings dropped.
And Treasury Secretary Steven Mnuchin wants some credit for the exodus.
MasterCard, Visa, and Stripe, three of the biggest names that have dropped, all received a letter a few days earlier from Senator Sherrod Brown (D-OH) and Sen. Brian Schatz (D-HI), warning them of the risks of backing Facebook’s venture. Some saw the letter as the likely inciting factor in their exit.
But in an appearance on CNBC on Monday morning, Mnuchin said, “I wouldn’t give them too much credit, because at Treasury we wrote letters as well. And we’ve been very clear, I’ve met with the representatives of Libra multiple times… we’ve been clear with them that if they don’t meet the standards of our money-laundering standards, and the standards that we have at FinCEN, that we would take enforcement actions against them. And I think [the companies that dropped out] realized that [Libra is] 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.”
Mnuchin’s comments are interesting in light of the larger momentum against Libra from lawmakers on both sides of the aisle. His stance is a reminder not only that Facebook faces an uphill climb in its plan to launch Libra in 2020, but that lawmakers are even jockeying to take credit for being the ones to stop Libra from launching.
On Friday evening, after some of the biggest names announced they would exit the Libra Association, David Marcus, the Facebook executive in charge of crypto and blockchain, tweeted about the exits: “I would caution against reading the fate of Libra into this update. Of course, it’s not great news in the short term, but in a way it’s liberating. Stay tuned for more very soon. Change of this magnitude is hard. You know you’re on to something when so much pressure builds up.”
The remaining members of the Libra Association gather this week in Geneva, and Facebook CEO Mark Zuckerberg will testify about Libra before Congress on Oct. 23.
Daniel Roberts covers bitcoin and blockchain at Yahoo Finance. Follow him on Twitter at @readDanwrite.