Sunday, 13 October 2019
Facebook Libra: Mastercard, Visa and Ebay Join the Crypto Paypal Departures
Facebook's efforts to create cryptocurrency were hit on Friday after several key partners, including MasterCard, Visa, eBay, Paypal, Stripe and Mercado Pago, abandoned the project, the first company to abandon it was paypal. The defections followed fierce criticism from global regulators and lawmakers and led some industry observers to question whether the Balance program could survive.
The news comes days before the Libra Association, the group that will oversee the digital currency, prepares to summon its members and asks them to sign a constitution. The meeting is scheduled for Monday in Geneva. A spokeswoman for the Libra Association said Friday that the meeting would be held as planned and that it would announce the first list of official partners once the official letter was signed.
In a statement, the spokeswoman said the group "is committed to moving forward and building a strong partnership" while working to create a "safe, transparent and user-friendly implementation of 'a global payment system that collapses' financial barriers for billions of people'.
When Facebook launched its plans for Libra in June, an essential part of its launch was supported by key players in the payments and technology sector. Cryptocurrency would be performed outside of Geneva by the organizations that make up the Libra Association, not just Facebook. But now that this alliance seems to be eroding, the future of the project is uncertain.
"I do not think Facebook can do it itself," Wedbush Securities analyst Michael Pachter told Bloomberg TV. "Unless a big bank intervenes like JP Morgan, I do not think that can happen."
In a tweet Friday, David Marcus, the Facebook executive who led the effort, said the departure of six partners would not affect the effort. "I do not advise you to read the fate of Libra in this update," he writes. "A change of this magnitude is difficult. You know that you are in something when so much pressure is created. "
Whether Libra implodes or not, the outings highlight the extreme challenges that await the project and, if successful, could have a radical impact on the global financial system. "It's very possible that this will fail completely," said Lisa Ellis, an analyst at MoffettNathanson. Even if he survives, progress will take much longer and "may become somewhat obscure," he added.
Facebook has faced a violent reaction since the company announced plans for Libra. Politicians and regulators around the world have asked Facebook to stop its progress, and some have suggested that Libra could be used for money laundering or money laundering projects.
Despite the control of officials and the exodus of partners, Facebook remains attached to Libra, according to a person familiar with the case that would have asked not to be identified because it was not allowed to speak in public. Some people within the company believe that defections are partly caused by established payment providers who care about a new entrant who invades their territory, said the person.
In the months following its announcement, Facebook frequently found itself in the limelight of cryptocurrency. Marcus went to Washington in July to testify before Congress about Facebook's plans. Later this month, Executive Director Mark Zuckerberg is scheduled to appear before the House Financial Services Committee to answer more questions about Libra.