Given the spotlight on Facebook, it is sometimes difficult to remember that the Libra Association council has other members. When it was launched in June this year, the association listed 28 members. The list was a diverse one and included the likes of payment processors, such as Mastercard and Visa, and non-profits like Kiva and World Women’s Banking.
But little is known about their role or thoughts on Libra. A case in point are the recent hearings. Even as Libra chief David Marcus took a beating before regulators during the recent hearings, its partners in the initiative mostly remained silent. Yahoo! Finance recently contacted Facebook’s Libra partners to determine their response to the hearings.
A Case of Caution?
Facebook has window-dressed the project as an effort to help the unbanked and underbanked population of the world. (But there are multiple business opportunities for the social media behemoth and its partners, including handsome returns from its reserves).
For the most part, Libra Association council members stuck to the narrative about serving the underbanked and unbanked. For example, Women’s World Banking said it continued to see Libra “as an opportunity to complement other work we are doing to achieve financial inclusion for women around the world.” Vodafone, which already has a digital coin project in Kenya’s mPesa, took a similar tack. Mercy Corps, another nonprofit listed on the Libra site, called the Facebook hearings “expected and welcome.” “This is a significant new initiative that requires critical questions and broad input from regulators and lawmakers to get right,” the humanitarian aid nonprofit stated.
The sole acknowledgement of Libra’s business opportunity came from PayPal in another interview with the same publication. Julian King, CEO of Xoom – PayPal’s money transfer business, told Yahoo! Finance that the market for remittances, which is a prominent use case for Libra, is a “red hot” market. “We have proven very, very clearly that there is a great market available,” he said, adding that the “(remittance) opportunity would grow.” (While it plans to levy a charge for money transfers, Facebook has said that it will not be substantial.) Visa, Andreessen Horowitz, Anchorage, and Breakthrough Initiatives declined to comment and other Libra Association members did not respond to Yahoo! Finance.
The cautious responses from Libra Association members are understandable. Most of them have signed nonbinding letters of intent for the partnership, meaning they are not fully committed to it. (The Visa CEO confirmed this during the company’s earnings call this week). The Congressional and Senate hearings this month were a precursor to the difficulties that Facebook might face as it shepherds the project through various jurisdictions. The partnership, such as it is, is predicated on Facebook’s ability to manage the tangle of regulations and laws that the initiative will face when it rolls out globally. The social media behemoth could very well find itself defriended by its Libra Association partners, if regulators around the world come down hard on the project.