Facebook’s Libra Association looks to be increasing embattled, after Stripe, Mastercard and eBay all withdrew their support for the nascent cryptocurrency project. The withdrawal of the three financial giants follows hot on the heels of PayPal pulling out of the project last week.
Libra is intended to capitalize on the rapidly growing cryptocurrency niche by becoming a global currency, while obviously being tied closely to the hugely popular Facebook social media platform. But with several big partners of the crypto platform having ditched it, and in a very short period of time, the future of Libra must be in serious doubt.
This is doubly so considering that regulators have heaped scrutiny on Libra ever since it was announced. This phenomenon is far from unusual for the cryptocurrency sphere, with the attitude of authorities towards cryptocoins being, at best, somewhat lukewarm in general. But Facebook had hoped that its big name, reputation, and established business model, would mean that governments and regulators would be more favorable towards the project.
Facebook describes the Libra Association as “an independent…not-for-profit organization with the mission to empower billions of people through the creation of a simple global currency and financial infrastructure.” The association continues to boast a wide range of notable partners, with the likes of Uber, Spotify and Vodafone all involved.
Mass pull out
But the loss of some major support from the financial sector will undoubtedly be a massive blow. Elsewhere, five of the six payment-related firms that were initially involved in Libra have already pulled out, with only the Dutch company PayU remaining.
As Facebook continues to make plans for the rollout of Libra, chief executive Mark Zuckerberg is due to appear before the US House Committee on Financial Services on October 23. Governments are particularly concerned that Libra could be used for money laundering, which has been an issue right across the cryptocurrency sphere.
Commenting on its seeming abandonment of Libra Association, Visa did strike a potentially positive note for the future, stating that it will “follow its progress closely and remain open to working with the Libra Association at a later stage.”
Facebook responded robustly to the apparent bad news, with David Marcus, Facebook’s executive in charge of its Libra, writing on Twitter that the loss of its partners was liberating, and that the Libra Association still had a bright future.
“I would caution against reading the fate of Libra into this update,” wrote David Marcus, who before joining Facebook was PayPal’s president. 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,” Marcus wrote.
Cryptocurrencies have become big news after the by now infamous Bitcoin massively increased in value. But some crypto purists have been critical of Libra, which places completely control for the project under the auspices of a single private group.