Will they or won’t they?
Some partners in Facebook’s cryptocurrency and blockchain Libra are having second thoughts about the venture, according to two separate reports published in the Wall Street Journal and Bloomberg yesterday.
Visa Inc., Mastercard, Stripe, and Paypal Holdings have already signed nonbinding letters of intent to join the Libra Association, a 28-member nonprofit responsible for governance on the blockchain. But they may not sign onto the project due to concerns relating to its reception from regulators and lawmakers.
A Regulatory Tinderbox
Ever since it was announced in June, Libra has drawn widespread criticism from governments across the world. The French finance minister Bruno Le Maire asked G-7 ministers to examine the cryptocurrency and threatened to ban it. Across the pond, Rep. Maxine Waters (D-CA) has called for a halt to its development work until Congress has had a chance to study implications. Libra Chief David Marcus spent two days this past July convincing hostile lawmakers about the venture. But he was not successful.
The optics of being associated with Facebook, a company with a reputation for playing hard and fast with government rules and the privacy of members on its massive social network, is also weighing on the minds of Libra partners. The social media network is already under fire in several jurisdictions and Libra could further intensify government eyes on the company. That perception could have a spillover effect on Libra, which could come under greater scrutiny from regulators. The Bloomberg report quotes anonymous sources as saying that Facebook’s partners are concerned about “maintaining positive relationships with regulators who have reservations about the project.”
Meanwhile Libra chief David Marcus responded to the WSJ report on Twitter. He said the Libra Association would finalize its first wave of members in the coming weeks. The association already has 28 members and intends to increase that number to 100 before launch next year. According to him, Libra is “very calmly and confidently working through the legitimate concerns” raised by regulators.