Following much hostility from US Legislators and the withdrawal of seven companies from the so-called Libra Association (the organization of backers for Facebook’s global cryptocurrency project), one US Senator has stepped forward to show support for Libra.
Indeed, US Senator Mike Rounds (R-SD) sent an open letter to Anchorage, a trust co0mpany based in his home state, praising the company for its decision to stay in the Association: “your willingness to take risks in an effort to improve the lives of Americans and our neighbors across the globe is one of the hallmarks of what makes our country great,” he wrote.
South Dakota has previously been recognized as a leader of cryptocurrency-related legislative efforts within the US. The state is home to the country’s first “Trust Task Force”, and BitGo has been based in South Dakota since 2018. In July, Anchorage announced an initiative to build a “smart” crypto custody firm in South Dakota.
”It is profoundly disappointing that my colleagues chose to address your peers in such an ominous tone.”
Notably, the letter from Senator Rounds follows another letter that was sent to a number of Libra Association members by Brian Schatz and Sherrod Brown, who are respectively the Democratic senators of Hawaii and Ohio.
In the Anchorage letter, Rounds said that “it is profoundly disappointing that my colleagues chose to address your peers in such an ominous tone, which I fear may put a chill on innovation in the long run,” and expressed concerns that the US was lagging behind in the global digital economy.
Specifically, Rounds referred to the fact that by 2022, payments made from digital wallets “will comprise less than 10 percent of U.S. consumer in-person point of sale payments,” while Africa already had “100 million active mobile money accounts” in 2017. He also noted that mobile payment transaction volume in the US is dwarfed by China’s.
Rounds also said that he found the negative reaction to Libra to be “puzzling” due to the age of US securities laws: “that law was written more than half a century before computers and the internet were created, more than two decades before Hawai’i was admitted to the Union, a decade before the jet engine was developed, and in a period of time in which 90 percent of rural America lacked electricity,” he wrote.
Letter from Schatz and Brown warned Libra Association members that they may be liable for Facebook’s shortcomings
However, Senator Rounds’ letter did not directly address some of the concerns that Schatz’ and Brown’s letter contained regarding Facebook’s integrity.
The letter, which was shared on Twitter by Gabor Gurbacs, digital asset strategist/director at VanEck, said that “Facebook 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.”
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> This is the type of letter executives at @stripe, @Mastercard and @visa (former @Libra_ members) have received.
> Many executives may have chosen not to experiment and innovate in order to avoid regulatory pressure!Sad!
> America can do better!
> Source: https://t.co/M36bkEKJU9 pic.twitter.com/kF3AXf9Xvd
— Gabor Gurbacs (@gaborgurbacs) October 12, 2019
The letter warned Libra Association members that they may be liable for Facebook’s shortcomings: “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.”
The letter also alleges that Facebook is attempting to act as an unregulated financial arbitrator, and that the social media giant “is attempting to accomplish [this] objective by shifting the risks and the need to design new compliance regimes onto regulated members of the Libra Association like your companies,” the letter from Schatz and Brown reads.
However, Rounds’ letter does specifically address Schatz’ and Browns’ concerns regarding compliance with anti-money laundering laws and anti-terrorist financing measures but said that it was the responsibility of the federal government to ensure that companies like Libra are adequately complying with these kinds of regulations.
“Expanding the federal government’s anti-money laundering and crime-fighting jurisdictions to include digital currencies would be a sensible way to resolve fear about anti-money laundering controls,” he wrote.
Rounds’ efforts to urge Anchorage to remain with the Libra Association also follow the exodus of seven companies from the organization: PayPal, eBay, Mastercard, Visa, Stripe, Booking Holdings Inc., and Mercado Libre Inc.