During a June earnings report, Facebook had cautioned that its blockchain and cryptocurrency Libra may not launch due to regulatory pressure from around the world. That future prospect seems to have become more real with recent developments. After governments and international organizations piled on the project, it is the turn of Facebook’s partners to ratchet up pressure.
According to a Financial Times report, three members of the Libra Association – the governing body for the blockchain – have developed cold feet about Libra due to mounting regulatory scrutiny. Two members are considering exiting the project due to this reason while another one is worried that public support for Libra might result in more attention on its own regulatory compliance in its line of business.
“I think it’s going to be difficult for partners who want to be seen as in compliance [with their own regulators] to be out there supporting [Libra]”, the Association member told FT. The member also criticized Facebook for launching the project without understanding its full regulatory impact. Disillusionment with the prevailing state of affairs is not restricted to members of the Association. Even Facebook is reportedly fed up of the association’s public radio silence and sticking its “neck out” on Libra-related matters.
Privacy and Regulatory Concerns
The Libra Association is composed of 28 members, spanning a wide array of fields from payment processing behemoths like Visa and Mastercard to noted venture capital firms like Andreessen-Horowitz to international NGOs and ride sharing apps like Uber and Lyft. Earlier reports have indicated that Facebook’s partners in the project have only signed Letters of Intent (LOI) and not committed fully to the project because they were apprehensive about regulatory scrutiny.
Their fears turned out to be correct. Since its announcement, the Libra project has faced a barrage of criticism and questions from regulators. Facebook’s prior reputation for handling privacy-related matters has spilled over into its latest mission and regulators around the world are concerned about its implications for consumer data protection.
The latest is that the European Commission is probing the Libra project for potentially anti-competitive practices. Specifically, EU officials want to know how data will be exchanged between members as well as how the Association will utilize user data. Additionally, they want to know how the project will be integrated into existing Facebook platforms. Members of the U.S. Congress have embarked on a trip to Switzerland to learn more about the project and crypto regulation.