Dive Brief:

• Sens. Brian Schatz, D-HI, and Sherrod Brown, D-OH, urged Visa, Mastercard and Stripe to reconsider their association with Libra, Facebook's cryptocurrency project, in letters Tuesday to the payment companies' CEOs.
• The letters come days after fellow payment company PayPal withdrew from the Libra Association.
• Facebook CEO Mark Zuckerberg is set to testify Oct. 23 about his company's impact on financial services and housing, the House Financial Services Committee said Wednesday.

Dive Insight:

Schatz and Brown, members of the Senate Banking Committee, may be betting PayPal's departure from the Libra project will spur other payment companies to rethink their involvement. Their letters come at a crucial time in the currency's development. Representatives of the 27 companies backing the project could sign the Libra Association charter Oct. 14 at a meeting in Geneva.

"[Facebook] has not provided a clear plan for how it will prevent Libra from facilitating criminal and terrorist financing, destabilizing the global financial system, interfering with monetary policy, or exposing consumers to risks currently limited to accredited investors," the senators wrote. "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."

Schatz and Brown said the social media giant wants the benefits of providing financial services without the regulation, passing the responsibility of compliance on to Libra Association companies. "If you take this on, you can expect a high level of scrutiny from regulators not only on Libra-related payment activities but on all payment activities," the senators wrote.

Raymond Pucci, director of the merchant services practice at Mercator Advisory Group, told American Banker the regulatory environment and PayPal's departure may sway the companies. "Other payment players are getting cold feet," he said. "No one but Facebook right now has skin in the game."

Visa, in its most recent earnings call, remained supportive but ultimately noncommittal to Libra. "Our ultimate decision to join will be determined by a number of factors, including obviously the ability of the association to satisfy all the requisite regulatory requirements," CEO Al Kelly said, according to TechCrunch. "But obviously, given that we've expressed interest, we actually believe we could be additive and helpful in the association."

The consequences would likely be minimal for companies that abandon the project now. Libra Association members signed nonbinding agreements before the currency was unveiled in June. And they haven't yet been required to submit the agreed $10 million-apiece investment in the project.

The lawmakers are reportedly not the first U.S. government officials to write the payment companies over concerns about Libra. The Treasury Department wrote Visa, Mastercard, Stripe and PayPal asking how the currency would fit into their money laundering compliance programs, The Wall Street Journal said last week.