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Within the last few weeks, several members of the Libra Association have left Facebook in the dust. Now, it looks like the social-media giant may lose the support of banks as well.
Ralph Hamers—the chief executive of ING—told the Financial Times today that banks might need to part ways with Facebook if the company is unable to address the various regulatory fears associated with its planned digital currency, Libra. Specifically, Hamers pointed to Libra’s potential to facilitate money laundering and other white-collar crimes as particularly problematic
The ING chief further suggested that banks have a responsibility to keep the doors closed to malicious or suspicious parties regardless of their size and scope, and that a company like Facebook would probably incur difficulties trying to make headway in the monetary space if its “activities were opening up [the system] for financial…crime.”
In a statement, a Facebook spokesperson responded by saying that the company is “committed to taking the time to get [Libra] right.” Facebook aims to ensure that “this global financial infrastructure is governed in a way that is reflective of the people it serves,” the spokesperson said.
The trouble is that most regulators around the world don’t seem to be buying it. And the Libra Association has suffered because of it.
Originally, the Libra Association started out with an impressive list of 27 members, many of which were fellow Silicon Valley peers. Six of those companies, however, recently parted ways with Libra, including PayPal, Visa and Mastercard. Some of these companies reportedly received letters from members of the U.S. Congress warning them of the potential risks that could stem from their involvement with Facebook.
Hamers, nevertheless, did have some nice things to say about Libra, calling it a “good initiative to learn with.” He said the ING team will examine Libra’s progress and make an informed decision from there, though other banks appear far less open to the idea.
Jamie Dimon—the chief executive of JPMorgan Chase—described Libra during a conference in Wasington, D.C. last Friday as a “neat idea that will never happen.”
Harsh words. But, at the same time, Dimon is probably not the person to ask if you’re looking for an impartial view on anything related to cryptocurrency. The JPMorgan exec has long had an aversion towards the industry, particularly Bitcoin. Two years ago, Dimon outright called Bitcoin a “fraud.” Bitcoin is “worse than tulip bulbs. It won’t end well. Someone is going to get killed,” Dimon said at the time.
In that light, any criticism of Facebook’s Libra might seem tame by comparison.