Why Facebook’s Libra Cryptocurrency Is In Trouble
Mastercard, eBay, Visa, Stripe and Mercado Pago are pulling out of Facebook’s Libra cryptocurrency project, the companies said on Friday. The news comes a week after PayPal announced its withdrawal from the project as government regulators continue to closely monitor developers’ plans..
The companies said they saw potential in the project, but decided to focus on other developments. A Stripe spokesperson said the company «supports projects aimed at making online commerce more accessible to people around the world». Stripe will «stay open to work with the Libra Association at a later stage», said a company representative.
A Visa spokesman said the company «will continue to observe, our final decision will be determined by a number of factors, including the Association’s ability to fully meet all required regulatory expectations. Visa’s continued interest in Libra stems from our belief that well-regulated blockchain-based networks can add value to secure digital payments for more people, especially in emerging markets.».
The initial coalition of 28 corporate backers for the Libra cryptocurrency appears to be dwindling as lawmakers continue to question how its emergence will affect sovereign currencies and how the project leaders will be able to ensure consumer protection. PayU is now the only payment company that continues to support cryptocurrency. Originally involved with the project, Uber and Lyft told CNBC that their attitude towards Libra has not changed..
Decisions to withdraw from the project are made ahead of the scheduled meeting of the Libra Association Council on October 14. A week later, the Libra cryptocurrency project will again be in the spotlight of US lawmakers when Facebook CEO Mark Zuckerberg testifies before the House of Representatives Financial Services Committee..
David Marcus, who leads the Libra project and was previously president of PayPal, testified before the committee in July. Then government officials, including the chairman of the committee, Maxine Waters, representing the state of California, asked Marcus if Facebook would postpone its plans until the necessary rules were passed. Marcus did not answer in the affirmative at the time, according to Waters’ assessment. She said his answer «was not a commitment».
The Libra Association, the non-profit organization in charge of cryptocurrency governance, said Friday afternoon that it still hopes to move forward..
In a statement, the head of policy and communications, Dante Dispart, said: «We are dedicated to moving forward and continuing to build a strong alliance of some of the world’s leading businesses, non-profit organizations and other stakeholders to achieve a secure, transparent and consumer-friendly approach to a global payment system that breaks down financial barriers for billions of people. We look forward to the first meeting of the Libra Association Board, which will take place in just 3 days and which will announce the first members of the Libra Association.».
Facebook declined to comment.