Facebook’s Libra currency abandoned by major financial companies

Author: 
Reuters
ID: 
1570863793531863300
Fri, 2019-10-11 23:41

Facebook’s ambitious efforts to establish a global digital
currency called Libra suffered severe setbacks on Friday, as major
payment companies including Mastercard and Visa Inc. quit the group
behind the project.
The two companies announced they would leave the association Friday
afternoon, as did eBay, Stripe and Latin American payments company
Mercado Pago. They join PayPal Holdings Inc. which exited the group
a week ago, as global regulators continue to air concerns about the
project.
The latest exodus leaves the Libra Association without any
remaining major payments companies as members, meaning it can no
longer count on a global player to help consumers turn their
currency into Libra and facilitate transactions.
The remaining association members, including Lyft and Vodafone,
consist mainly of venture capital, telecommunications, blockchain
and technology companies, as well as nonprofit groups.
“Visa has decided not to join the Libra Association at this
time,” the company said in a statement. “We 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.”
Facebook’s head of the project, former PayPal executive David
Marcus, cautioned on Twitter against “reading the fate of Libra
into this update,” although he acknowledged “it’s not great
news in the short term.”
Libra will press ahead with plans to formally charter the
association in three days despite the setbacks, Dante Disparte, its
head of policy and communication, said in a statement.
“We are focused on moving forward and continuing to build a
strong association of some of the world’s leading enterprises,
social impact organizations and other stakeholders,” he said.
“Although the makeup of the Association members may grow and
change over time, the design principle of Libra’s governance and
technology, along with the open nature of this project ensures the
Libra payment network will remain resilient.”
Facebook announced plans to launch the digital currency in June
2020 in partnership with other Libra Association members. Almost
immediately afterwards, the project faced relentless scrutiny from
global regulators, who said it raised a host of serious questions
that the group had yet to answer.
France and Germany last month pledged to block Libra from operating
in Europe and backed the development of a public cryptocurrency
instead. And US Federal Reserve Chairman Jerome Powell suggested
the project could not advance before addressing serious privacy,
money laundering, consumer protection and financial stability
concerns that must be addressed.
The rapid succession of exits by major financial companies Friday
afternoon suggested that scrutiny was taking its toll.
Three days earlier, a pair of senior Democratic senators wrote to
Visa, Mastercard and Stripe, telling them to be wary of “a
project that will foreseeably fuel the growth in global criminal
activity.”
“If you take this on, you can expect a high level of scrutiny
from regulators not only on Libra-related payment activities, but
on all activities,” Senator Sherrod Brown and fellow Democratic
Senator Brian Schatz wrote in the letters.
Brown said in a statement after the announcements on Friday that
the companies had been “wise to avoid legitimizing Facebook’s
private, global currency.”
Facebook Chief Executive Mark Zuckerberg is scheduled to discuss
the project when he testifies before the US House Financial
Services Committee on Oct. 23. US Representative Maxine Waters, who
chairs the panel, has repeatedly called on Facebook to shelve the
project.

Main category: 

France will block development of Facebook Libra
cryptocurrencyPayPal becomes first member to exit Facebook’s
Libra Association
Source: FS – All-News-Economy
Facebook’s Libra currency abandoned by major financial companies