PayPal’s exit, eBay, MasterCard, Stripe, and Visa are all exiting the Libra Association overseeing the cryptocurrency. An they may not be the last to go.
Amid heavy regulatory scrutiny from governments around the world, Facebook’s ambitious plans for Libra have begun to come apart at the seams.
PayPal has announced it was dropping out of the Libra Association, the nonprofit governing body operating nodes on the Libra blockchain and overseeing the cryptocurrency’s fiat reserve and governance. This was a particularly deep blow because David Marcus, head of Facebook’s Calibra subsidiary, is PayPal’s former president.
On October 11, PayPal was joined by eBay and Stripe, as well as Mastercard and Visa, in dropping out of the ambitious crypto project, which would create a stable digital currency for frictionless online payments built directly into Facebook apps and services. That means five of the founding 28 Libra Association members have now exited the project before the Libra charter is even signed.
In a statement, Visa said it has decided “not to join the Libra Association at this time,” but it “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.”
The founding companies had thus far made non-binding commitments to the project.
Libra faced intense criticism and questioning by House and Senate committees back in July, and lawmakers have implored Facebook to cease development of Libra until further notice. US lawmakers pressured Mastercard and Visa as well as Stripe to drop out in recent days. EU regulators have also expressed serious reservations about the venture and launched numerous inquiries and introduced legislation geared toward hindering or stopping the project.
Marcus and the Libra Association have maintained they “will not launch [Libra] until questions and concerns by regulators are addressed,” but the organization released a pointed response to PayPal’s exit last week.
“This journey to build a generational payment network like the Libra project is not an easy path,” Dante Disparte, the Libra Association’s head of policy and communications, told The Verge. “We recognize that change is hard, and that each organization that started this journey will have to make its own assessment of risks and rewards of being committed to seeing through the change that Libra promises. We look forward to the first Libra Council meeting…and will be sharing updates following that, including details of the 1,500 entities that have indicated enthusiastic interest to participate.”
The Libra Association is scheduled to meet in Geneva, Switzerland (where the association is incorporated) on Monday, Oct. 14 to appoint a board of directors and to announce official commitments from its founding member group, hence the flood of drop-outs.
This string of news comes only days after Mark Zuckerberg announced he would appear before the House Financial Services Committee on Oct. 23 at 10 a.m. ET. We’ll see how many other Libra Association members pull the ripcord in the meantime.
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