Visa and Mastercard Drop Support for Facebook’s Libra Cryptocurrency
So much for Facebook’s Libra cryptocurrency.
At the moment, it’s falling apart in front of our eyes.
Just last week, PayPal withdrew its support, as the project begins to face substantial queries from global regulators. While PayPal did not give a reason for leaving, it did note, “PayPal has made the decision to forgo further participation in the Libra association at this time and to continue to focus on advancing our existing mission and business priorities as we strive to democratize access to financial services for underserved populations,” as quoted by The Guardian.
However, according to the Financial Times, PayPal began to distance itself from the project thanks to increased regulatory scrutiny, as highlighted by The Verge, as we printed just last week. In addition, the Times did report that “at least one concern for PayPal has been the lack of attention Facebook executives have paid to Libra’s considerable backlash.”
Unfortunately for the cryptocurrency, PayPal isn’t the only one jumping ship.
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eBay, Stripe, Mastercard, and Visa just dropped out of the project, as well.
Visa “will continue to evaluate and our ultimate decision will be determined by a number of factors, including the Association’s ability to fully satisfy all requisite regulatory expectations. Visa’s continued interest in Libra stems from our belief that well-regulated blockchain-based networks could extend the value of secure digital payments to a greater number of people and places, particularly in emerging and developing markets,” as quoted by CNBC.
Very quickly, the original team of 28 corporate backers is falling apart.
All as global lawmakers question how Libra will impact sovereign currencies and how Facebook plans to protect consumers.
After all, Facebook doesn’t exactly have the best track record with that.
Even David Markus, who leads the Libra project tweeted, “Special thanks to Visa and Mastercard for sticking it out until the 11th hour. The pressure has been intense (understatement), and I respect their decision to wait until there’s regulatory clarity for Libra to proceed, vs. the invoked threats (by many) on their biz.”
There’s also plenty of criticism from world leaders.
The EU has already launched an investigation into Libra on antitrust issues, as we noted last week. And, according to Bloomberg, the EU is “currently investigating potential anti-competitive behavior” by the Libra Association. The report describes the document as a questionnaire suggesting the commission is concerned that Facebook’s planned digital payment system could unfairly lock out competitors.”
In France, leaders are saying they can’t “authorize the development of Libra on European soil,” as quoted by Forbes. Even other world leaders argue it could threaten the financial stability of nations, which Facebook does refute.
This news may not destroy Libra’s chances for success, but it raises plenty of caution.
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