Saturday, 06 June, 2020

Four major companies dropped out of Facebook's Libra project today

An eBay sign is seen at an office building in San Jose California Four major companies dropped out of Facebook's Libra project today
Deanna Wagner | 12 October, 2019, 14:44

Facebook announced plans to launch the digital currency in June 2020 in partnership with other members of Libra Association, but the project quickly ran into trouble with skeptical regulators around the world. Payment processing company Stripe is stepping back, as well as e-commerce company eBay.

Another major partner, Visa, has also been reportedly "reconsidering" its role in the nonprofit organization charged with running Libra, according to the Wall Street Journal.

Facebook has faced substantial criticism since the summer when it unveiled plans to create a separate, private currency system to allow users to make cross-border payments more easily. Also, representatives from the companies will appoint a board of directors for the Libra Association at the meeting.

Per a recent revelation by Bloomberg and Financial Times, eBay, Stripe, and Mastercard have exited Facebook's controversial stablecoin project, Libra. Among the Libra Association's founding members was PayPal, which David Marcus left to join Facebook.

Visa and Mastercard hold an effective duopoly over credit and debit cards in the USA and Europe, and are making substantial inroads into developing countries' payment systems.

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The two companies announced they would leave the association Friday afternoon, as did EBay Inc EBAY.O , Stripe Inc. and Latin American payments company Mercado Pago.

Earlier this week, two USA senators cautioned Visa, Mastercard and Stripe to reconsider their involvement in the project. "Now it's going to be a bigger challenge". It now appears that the regulatory and political pressure on Facebook was enough to convince a chunk of the original members to cut ties. Later this month, Chief Executive Officer Mark Zuckerberg is scheduled to appear before the House Financial Services Committee to answer even more questions about Libra.

"Visa's continued interest in Libra stems from our belief that well-regulated blockchain-based networks could extend the value of secure digital payments to a greater number of people and places, particularly in emerging and developing markets".

Both corporations confirmed within the past hour or so they will withdraw from the Libra Association, joining PayPal, which pulled out earlier this week. The letters suggested that the companies may not have been fully aware of the regulatory risks inherent in the project.

Speaking to the outlet, an eBay spokesperson asserted that while the company "respects the vision of Libra", the American firm will not be moving ahead with its participation in the Association, citing a focus on " rolling out eBay's managed payments experience for our customers".