Companies almost queued up when Facebook announced plans to launch its global cryptocurrency in 2020. Now it seems that the project could be delayed or scrapped altogether as it faces pressure from governments and regulators.
Visa, Mastercard, eBay, and Stripe have said they are leaving Facebook’s Libra one week after PayPal announced its withdrawal. In a statement explaining their decision, eBay, Visa, and Stripe all said they respect and continue to have interest in Libra, but had decided to focus on other projects. Mastercard did not respond to a request for a comment.
“Stripe is supportive of projects that aim to make online commerce more accessible for people around the world. Libra has this potential. We will follow its progress closely and remain open to working with the Libra Association at a later stage”, Stripe’s spokesperson said.
The coalition of 28 corporate backers of the cryptocurrency is dwindling. Each participant is supposed to invest 10 million dollars in the project. The only two payment companies that still support Libra are PayU and Mercadopago. The development comes as the first official Libra council, the governing body of the cryptocurrency, is to start on 14 October.
Despite the fact that Libra’s coalition’s ranks are thinning its creators remain upbeat. David Marcus, co-creator of Libra said he respected the companies’ decision, but downplayed their withdrawal.
The latest withdrawal from the project comes after several lawmakers sent a letter to Mastercard, eBay, Visa, and Stripe warning that the project may destabilise the global financial system. The lawmakers stressed that the companies would face increased financial oversight if they don’t part ways with Libra.
Facebook announced plans to launch its global cryptocurrency this July. CEO Mark Zuckerberg previously said that he wants to make the ability to send money as easy as sending photos. According to Facebook, Libra will be backed a basket of fiat currencies, which creators say would prevent price volatility that many cryptocurrencies suffer from. The project will be governed by an association of 28 members, including Facebook.
The announcement received mixed reactions with regulators and governments questioning Facebook’s motives. The company has been embroiled in several privacy scandals and was ordered to pay $5 billion over privacy violations. Others fear that the platform will facilitate criminal and terrorist financing.
Whether Facebook CEO Mark Zuckerberg will be able to allay these concerns and launch the project will be known after he testifies before Congress on 23 October.