Most payment companies have now pulled out of Facebook’s Libra project. Visa, Mastercard, Ebay, and Stripe have followed Paypal in dropping out of the project amid regulatory concerns. The Libra Association has responded to the exodus of these companies. David Marcus, who is in charge of the project, calls it “liberating.”
Also read: European Countries Step Up Response to Facebook’s Libra
Libra Losing Support of Major Companies
Visa, Mastercard, Stripe, and Ebay announced Friday that they will no longer be part of Facebook’s Libra project at this time. The move follows Paypal’s announcement last week to drop out of the project. Another payment-related firm, Mercado Pago, has also pulled out, leaving only the Netherlands-based Payu as the only payment firm left in the Libra Association. Mercado Pago primarily serves Latin America.
The remaining members of the Libra Association are mostly venture capital, telecom, blockchain, technology, and nonprofit groups.
The Libra Association is an independent nonprofit organization headquartered in Geneva, Switzerland, with offices in California’s Bay Area. Its members are each validator nodes that operate the Libra blockchain, the project’s website details.
Visa, Mastercard, Ebay, Stripe Exiting
Visa issued a statement Friday stating that it “has decided not to join the Libra Association at this time,” adding:
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 released a similar statement clarifying that it “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.”
Likewise, a spokesperson for Stripe said that “Libra has this potential … We will follow its progress closely and remain open to working with the Libra Association at a later stage.”
Libra Association’s Response
The Libra Association immediately responded to the exodus of major payment firms: “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.” The inaugural Libra Association council meeting is due to take place in three days when the initial members of the association will be announced.
David Marcus, Facebook’s executive in charge of the Libra project, also tweeted in response to the news of departing firms:
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.
Regulatory Concerns
Since Facebook unveiled its Libra project in June, the company has faced relentless scrutiny from regulators worldwide. Last month, France and Germany both pledged to block Libra from operating in Europe, and instead backed the development of central bank digital currencies. U.S. Federal Reserve Chairman Jerome Powell has suggested that serious concerns must be addressed before the project can proceed. These concerns include privacy, money laundering, consumer protection, and financial stability.
Prior to the announcements by Visa, Mastercard, and Stripe, two Democratic senators cautioned the companies to be wary of “a project that will foreseeably fuel the growth in global criminal activity.” In a letter to them, Senator Sherrod Brown and Senator Brian Schatz wrote, “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.”
Meanwhile, Facebook CEO Mark Zuckerberg is due to appear before the House Committee on Financial Services on Oct. 23 to discuss Libra and its planned roll-out.
What do you think of Visa, Mastercard, and other companies leaving the Libra project? Let us know in the comments section below.
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