GOP senator tells Libra Association member to stay the course

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WASHINGTON — As lawmakers and regulators continue to scrutinize Facebook’s plans to launch its proposed Libra cryptocurrency, the project has a fan in at least one Republican senator.

Sen. Mike Rounds, R-S.D., is encouraging companies to continue participating in the Libra Association, a group of companies that was formed to develop the proposed cryptocurrency, defying calls by some lawmakers for Facebook to halt its project.

“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,” Rounds said in a letter to Nathan McCauley, president of Anchorage Trust Co., a member of the Libra Association that is based in South Dakota. “I believe that there is promise in cryptocurrencies and digital payments, but regardless of how one views such technologies, it is clear that the United States is falling behind in this space.”

Rounds, a member of the Banking Committee, said that Libra Association members should not wait for regulators like the Federal Reserve, which some speculate could operate its own cryptocurrency, to move forward with a digital currency project. He cited the slow pace at which the Fed has moved with its proposed FedNow real-time payments system.

“Given the length of time it will take for the Fed to finish FedNow, the Libra Association should not wait to see if recent conversations about a Fed-run digital currency come to fruition,” Rounds wrote.

Rounds added he was encouraged by the “entrepreneurial spirit” of Libra Association members.

“While the Association is still in the process of standing up its governance framework and its operating rules, it would be a shame to lose the progress you have already made in creating Libra,” Rounds said. “I hope you persevere and that your decision to move forward is based on your sound business judgement.”

Rounds’ support for Libra comes in stark contrast to comments last week by Sherrod Brown, D-Ohio, ranking member of the Senate Banking Committee, after PayPal, Mastercard, Visa and Stripe all said they would not participate in the Libra Association. Brown said the companies were wise to steer clear of Libra.

“Large payment companies are wise to avoid legitimizing Facebook’s private, global currency,” Brown said in a press release. “Facebook is too big and too powerful, and it is unconscionable for financial companies to aid it in monopolizing our economic infrastructure. I trust others will see the wisdom of avoiding this ill-conceived undertaking.”

House Financial Services Committee Chairwoman Maxine Waters, D-Calif., has proposed legislation to bar major technology companies from operating in the financial services space, though other Democrats have said the legislation could be a bridge too far.

The letter also comes as Facebook CEO Mark Zuckerberg is set to testify to the House Financial Services Committee next week.

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