Why eBay, Mastercard, Visa ditched Facebook's Libra cryptocurrency project
What's the story
When Facebook announced Libra in June, it had promised a digital token for personal and store payments. The company had assured the privacy-conscious public that the coin will be controlled by a batch of industry leaders, the Libra Association, instead of Facebook itself. Now, in a major surprise, many of these 'industry leaders' have started bailing on the whole project. Here's why.
Association details
Libra Association formed to govern the cryptocurrency
Facebook created the Libra Association with 28 leading players in the world of tech and finance to give the public a sense of confidence in the cryptocurrency. The members included names like eBay, PayPal, and Mastercard and were tasked with the work of governing the currency and regulating the Libra Reserve - an asset pool to ensure its stable intrinsic value.
Backing out
Now, many of the members have started leaving
Facebook planned to launch Libra in 2020, but the backers of the project - major payment processors - have already started backing out. It all started earlier this month when PayPal pulled out of the Libra Association followed by Visa, Mastercard, Stripe, and Mercado Pago. Even famous e-commerce giant eBay has ditched the project, shaking the whole Facebook-backed digital currency project.
Reason
Why these companies are bailing on Libra?
Though the companies backing out of Libra Association haven't given a reason, it appears they got cold feet from the regulatory issues that may stem from the cryptocurrency. Essentially, being payment processors (except eBay), they fear that Libra might fail to meet specific regulatory requirements they have in place for dealing with cases of frauds, money laundering, et al.
Information
Payment processors might have to take the blame
Now, this basically means, these companies must have left the Association thinking that if something went wrong, like a case of fraud, they may have to bear the blame and consequences of the fallout, instead of Facebook.
Comments
Here's what eBay and Stripe said about their departure
"We highly respect the vision of the Libra Association; however, eBay has made the decision to not move forward as a founding member," the company said while speaking on its departure. Payment processor Stripe reiterated a similar statement, noting that it will "follow its [Libra's] progress closely and remain open to working with the Libra Association at a later stage."
Response
Libra executive David Marcus suggested departures are temporary
Soon after the departures, Libra executive David Marcus thanked Visa and Mastercard "for sticking it out until the 11th hour" and suggested that their moves are temporary. "Special thanks to @Visa and @Mastercard for sticking it out until the 11th hour," Marcus tweeted out, adding that "the pressure has been intense (understatement), and I respect their decision to wait until there's regulatory clarity."
Twitter Post
Marcus promised we'd be hearing more about Libra 'soon'
I would caution against reading the fate of Libra into this update. Of course, it’s not great news in the short term, but in a way it’s liberating. Stay tuned for more very soon. Change of this magnitude is hard. You know you’re on to something when so much pressure builds up.
— David Marcus (@davidmarcus) October 11, 2019