Facebook’s Libra Association disintegrates further
Priya Wadhwa
10X Technology

Facebook’s Libra Association disintegrates further

Could these short term challenges become big hurdles in the long term?

A week after PayPal declared its withdrawal from Mark Zuckerberg’s Libra Association, five major financial institutions have followed suit: eBay, Visa, Mastercard, Stripe, and Mercado Pago.

The rumours of Visa and Mastercard leaving were ripe well before PayPal announced its exit.

With the current count, The Libra Association members are down from 28 to 22. What is important to note is that 5 out of 6 of those who have left the coalition were from the financial industry; thereby leaving Libra without any payments processor.

As the governments of the US and Europe scrutinize the cryptocurrency further, questioning its impact on sovereign currencies, support from Libra’s coalition is falling apart.

All companies have majorly stated the same thing — that they remain supportive of the project, however they have taken the decision to focus their efforts elsewhere.

[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 announced in a statement

The Verge reported “On Wednesday, two Democratic senators urged Visa, Mastercard, and Stripe to reconsider their involvement with Libra, saying it could have significant regulatory consequences for any payment processor involved. “If you take this on,” the letters read, “you can expect a high level of scrutiny from regulators not only on Libra-related activities, but on all payment activities,” reported The Verge.

The remaining Libra Association members will meet tomorrow, 14 October 2019, which could see hesitations being calmed and support consolidating.

Next week on 23 October, Mark Zuckerberg will testify in front of the House Financial Services Committee, where he is likely to face further scrutiny in relation to his Libra project.

Even after withdrawing, Visa maintains its position of support for Libra, as did Paypal last week, owing to the potential the cryptocurrency has. It said, "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.”

The waters ahead look troubled for Mark Zuckerberg and Libra. While the project in theory is fantastic to democratize the finance sector and promote inclusivity, its financial and economic impact on countries is unclear, which is the crux of the problem. This is why the ex-Libra Association members and industry experts are calling for regulations. However, that might take longer than Mark’s plans to roll out Libra.

We will keep a watch on how the Libra project unfolds.