Facebook News: Treasury Secretary Says Companies Leaving Libra Cryptocurrency Due To Regulatory Concerns

Treasury Secretary Steven Mnuchin said Monday that the six companies that recently left the Libra cryptocurrency project bailed out because they fear that the initiative will not hold up to regulatory scrutiny. He also believes that these companies left because they know the U.S. government could take criminal enforcement against Libra if the digital currency doesn't meet regulatory standards.

Mnuchin told CNBC that he has been clear to Libra representatives that the cryptocurrency would need to meet certain standards in order to prevent money-laundering and other financial crimes. He said that the companies that left the project last week realized that the Libra team is "not ready, they're not up to par. And I assume some of the partners got concerned and dropped out until they meet those standards."

Previously, Mnuchin said that Libra could be used to fund terrorism and that the cryptocurrency represents a "national security issue."

The companies that backed out last week include PayPal, Visa, Mastercard, Stripe, eBay and Argentine company Mercado Pago. This leaves the Libra Association, which supervises the cryptocurrency project, without the backing of any major digital payment company.

The now 22-member Libra Association is convening in Geneva on Monday in order to appoint a board of directors and to discuss how the organization will be structured. Libra is expected to launch in 2020, but it could take longer if the Libra Association continues to lose backers.

Other U.S. officials that have had doubts about Libra include Federal Reserve Chairman Jerome Powell, who has said that the cryptocurrency "raises many serious concerns regarding privacy, money laundering, consumer protection, financial stability."

French finance minister Bruno Le Maire criticized Libra last week and said that it should not be developed in the EU. He believes that Libra could undermine the monetary sovereignty of the EU and that private companies should not develop currencies.

Libra was announced by Facebook in June. The cryptocurrency features a digital wallet, Calibra, and can be managed by cell phone. Libra aims, in particular, to help the estimated 1.7 billion people on the planet without access to a traditional bank account.