Visa, Mastercard, PayPal to potentially face greater scrutiny because of Libra

Early Libra backers are likely to face more scrutiny from regulators because of their endorsement of Facebook’s cryptocurrency project, Bloomberg writes. According to Morgan Stanley analyst James Faucette, who believes the companies may be met with a “heavy burden.” Widespread take-up of Libra could make it a “free-floating currency, therefore it could become a 'supranational currency,'” Faucette said. Thus, it would be outside of central bank or governmental control.

Faucette noted he believes the risks both Mastercard and Visa face are mainly regulatory and political.

The approaching U.S. House and Senate hearings on Libra will set the tone for the Libra debate with regulators, Cowen’s financial services and housing policy analyst Jaret Seiberg wrote. The hearings are “critical for Facebook;” however, they are also “significant for Libra supporters, including Visa, Mastercard, PayPal, and Stripe.

“There is only one chance to frame the debate,” he said. “It has to set a tone at these two hearings for how Libra will benefit consumers while protecting their privacy.”