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MasterCard: Libra Is Not Safe, Has No KYC Policy

Problems with financial regulators, lack guarantees of compliance with the law and other factors due to which the company left the Libra project. 

Mastercard refused to participate in the development of Facebook cryptocurrency, not only because of problems with financial regulators but also because of concerns about compliance with the business model, said the head of the company Ajay Banga in an interview with the Financial Times. According to him, key members of the Libra Association could not guarantee that its actions would be consistent with the law regarding money laundering, the Know Your Client (KYC) policy, and data privacy.

“The altruistic idea turned into their own wallet. It seems to me that this is wrong. The currency issued by the state should be understood as a tool that you can use to buy rice or bicycles. But if you get paid in Libra coins that are sent to your Calibra wallet and then converted to pounds to buy rice, I don’t understand this, ”said the head of Mastercard.

He added that another problem was the lack of understanding of how Libra plans to make money. Initially, Facebook positioned its payment system as a financial instrument of general availability, but then it turned into a corporate digital wallet Calibra, Banga emphasized. He believes that this made his commercial product out of a generous idea.

Libra: Potential Rival for MasterCard and other payment systems?

Lisa Ellis, an analyst at MoffettNathanson, suggested that the company had other reasons for not participating in the development of Libra. If launched, the payment system could become a serious competitor for Mastercard, the situation of which is also exacerbated by the growing popularity of other digital wallets, such as Apple Pay and India Paytm, the expert said.

However, Banga refused to consider the Facebook payment system a threat to Mastercard. The head of the company said that she has more than 30 thousand partner banks, and her policy is entirely consistent with the laws of the countries served, which is fundamentally different from the situation of Libra.

Earlier, we reported that Vodafone decided to leave the Libra project as the company’s official raise concerns about the reputation.