- Facebook’s project to bring its own digital currency onto the market is increasingly being shaken as more and more partners jump off the bandwagon.
- Paypal has already bailed last week, further financiers report critical concerns, as Libra is not yet fully regulated and complies with the legal framework.
As CNF has already reported, Libra is increasingly encountering greater resistance worldwide. First, some leading politicians from Germany and France announced that Facebook Libra is undesirable and that measures will be taken to ban the use of Libra. In addition to these negative developments, cooperation partners are also expressing serious concerns.
Paypal is jumping off – is this just the beginning?
Last week Paypal surprisingly announced its withdrawal from Facebook’s cryptocurrency project Libra. This example was followed by the marketplace giant eBay and other heavyweights in the financial sector, Stripe, Mastercard and Visa. In an interview with the Finance Times, eBay gave the reason that the company would concentrate on further developing its own software.
Participation in Libra is a game of fire, especially for payment service providers who have to meet considerable legal requirements due to the collection of sensitive data. On 08. October 2019, Senators Sherrod Schatz and his colleague Brian Brown wrote open letters to the board members of Visa, Mastercard and Stripe. They made it clear that existing problems in the area of data protection, privacy or any other area can quickly become problems of their own company.
Through the direct involvement and processing as well as transfer of the data to these companies, it cannot be ruled out in the long term that if Facebook makes a mistake, this can have a direct impact on Mastercard and other partners. Letters will do this in a targeted manner:
You should be concerned that any weaknesses in Facebook’s risk management systems will become weaknesses in your systems that you may not be able to effectively mitigate.
Other companies such as Uber or Lift are also part of Facebook’s financial support team, but they do not have the same strict requirements and therefore potential problems that may result in further development. Facebook is probably aware of these risks and would like to publicly thank all participating companies as well as those who have left the company to date.
Facebook advises calm and serenity
The head of Facebook’s blockchain department, David Marcus, thanks Visa and Mastercard on Twitter for being patient and waiting for regulatory clarity. However, Facebook loses important investors, know-how and business relationships.
Special thanks to @Visa and @Mastercard for sticking it out until the 11th hour. The pressure has been intense (understatement), and I respect their decision to wait until there’s regulatory clarity for @Libra_ to proceed, vs. the invoked threats (by many) on their biz.
— David Marcus (@davidmarcus) October 11, 2019
The project caused a worldwide sensation and many governments were confronted with a global problem. Libra would compete directly with national currencies that have existed for several decades, turning the financial system upside down. The headwind that is emerging is therefore not a surprise, but shows how complex the Libra project really is.
It remains to be seen in which direction the project will develop and what direct effects it will have on our everyday lives.