Facebook Libra, the giant social media network’s cryptocurrency project is now 6 members short. The project was announced in June and got support from a multitude of already established companies to make it look legitimate. Some of these companies are pulling out their support.
Paypal was the first to announce it was leaving the Facebook Libra Association late last week but remained supportive of the project’s aspirations and will look forward to continued dialogue on ways to work together in the future. Paypal said it will continue to partner with and support Facebook in various capacities.
This week, five other founding members are calling it quits on Facebook Libra. The five are high profile companies Libra was betting its chips on after Paypal left but now the Facebook Libra Association will now have 21 members.
Visa, Mastercard, eBay, Stripe and Mercado Pago have withdrawn from the Libra Association
*STRIPE TO EXIT FACEBOOK'S LIBRA CRYPTOCURRENCY
— Joe Weisenthal (@TheStalwart) October 11, 2019
This doesn’t look so well for them amid the intense scrutiny the project is facing from regulators. It’s even worrying when you realize that the Facebook Libra Association will be having its first meeting on October 14th in Geneva.
The association still has the backing of other huge companies like Spotify, Vodafone, Coinbase, Lyft, Uber, Thrive Capital. The meeting will have the members presumably deliver more specific commitments as formal charters are signed.
Companies could be leaving in fear of heavy scrutiny the project is facing and Facebook not giving the criticism enough attention. Paypal is one of them. Visa and Mastercard were urged by two Democratic senators to reconsider their involvement with Libra as it would also bring the same scrutiny to their backyard including all their payment activities.
Most of the companies that have exited are payment companies and operate under specific regulatory requirements that Libra doesn’t meet such as dealing with fraud, money laundering and sanctions enforcement. These companies are afraid that if Libra which wants to engage in financial activities without the responsibility of being regulated can be involved in shady transactions that would have them take the blame too if they are caught.
What they are saying:
- Visa Spokesperson to The Verge: Visa has decided not to join the Libra Association at this time. 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.
- eBay: We highly respect the vision of the Libra Association. However, eBay has made the decision to not move forward as a founding member. At this time, we are focused on rolling out eBay’s managed payments experience for our customers.
- Stripe: Stripe is supportive of projects that aim to make online commerce more accessible to people around the world. Libra has this potential. We will follow its progress closely and remain open to working with the Libra Association at a later stage
- Dante Disparte, Policy Chief Libra Association: 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. We look forward to the inaugural Libra Association Council meeting in just 3 days and announcing the initial members of the Libra Association.
- David Marcus, Libra Chief: I would caution against reading the fate of Libra into this update. Of course, it’s not great news in the short term, but in a way, it’s liberating. Stay tuned for more very soon. Change of this magnitude is hard. You know you’re on to something when so much pressure builds up.
I would caution against reading the fate of Libra into this update. Of course, it’s not great news in the short term, but in a way it’s liberating. Stay tuned for more very soon. Change of this magnitude is hard. You know you’re on to something when so much pressure builds up.
— David Marcus (@davidmarcus) October 11, 2019