When Facebook unveiled the idea for its Libra cryptocurrency in June, the project had some major backers from the traditional financial industry, including Visa, Mastercard, PayPal, and more. Now it looks like those key partners are getting cold feet in light of major scrutiny from financial regulators around the world.
Visa, Mastercard, and other organizations that initially signed on to create and maintain Libra are now “reconsidering their involvement” in the cryptocurrency, according to a report Tuesday from the Wall Street Journal.
The companies fear they could attract unwanted regulatory scrutiny from lawmakers and government officials in the United States and Europe if they continue to be a part of the Libra Association. The group of 28 founding members is set to meet in Geneva to go over a new charter on October 14, and that’s where they could iron out exactly what role each organization will play.
All of this is a sign that Libra, Facebook’s vision for a global cryptocurrency that could be used both within its social network and by people without regular access to banking services, might never happen — at least in the way that it was originally envisioned. This is the second report that major backers are looking to jump ship — The Financial Times reported similar news in August, though it didn’t name specific partners that were looking to possibly leave.
We reached out to a Libra Association spokesperson, who pointed to the original white paper that laid out the plan for the cryptocurrency, which says the organization hopes to expand to have 100 members by the first half of 2020.
Libra came under fire from lawmakers around the world almost the instant it was announced. President Donald Trump went after it in July, saying it would have “little standing or dependability.” Democrats in the House of Representatives have also called on Facebook to halt its plans for the cryptocurrency, while regulators in the EU, U.K., and Canada have expressed concerns about privacy and Libra.
India, a major target for Libra due to the hundreds of millions of people there without banking access, has proposed banning the currency altogether.
In audio recordings leaked to the Verge and released Tuesday, Facebook CEO Mark Zuckerberg said he still expects to roll out Libra in some places by the end of the year.
“By the time it launches, we expect we’ll have 100 or more companies as part of it,” Zuckerberg said.
He added that the company is engaged in “private” discussions with regulators, along with the more bombastic — and often negative — public hearings.
“The public things, I think, tend to be a little more dramatic,” Zuckerberg said. “But a bigger part of it is private engagement with regulators around the world, and those, I think, often are more substantive and less dramatic. And those meetings aren’t being played for the camera, but that’s where a lot of the discussions and details get hashed out on things. So this is going to be a long road. We kind of expected this — that this is what big engagement looks like.”
Update 10/1: Added comment from the Libra Association
- Facebook’s crypto dreams could be crushed as PayPal exits Libra Association
- Get your popcorn ready. Zuckerberg is set to testify before Congress again
- Here’s yet another reason why Facebook’s Libra might never happen
- In SEC filing, Facebook admits Libra cryptocurrency may not happen after all
- Facebook says it won’t launch Libra until regulators are happy