Can Facebook’s Libra cryptocurrency survive the exodus?
PayPal, Visa, Mastercard, eBay, Stripe, Mercado Pago and Brooking Holdings have backed away from participation on the Libra Association; their hands were forced when all members met Monday in Switzerland for formalize their commitment to the project.
“In many ways, PayPal, Visa and all the others took the only decision they sensibly could take under the circumstances,” Forrester Vice President of Research Martha Bennett said via email. “Given the continued lack of regulatory engagement…and continued lack of detail on key points around Libra (the coin), governance of the network, management of the fund, etc., the risk of reputational damage was simply too great.”
Beyond those immediate concerns, there is also the potential of inadvertently being drawn into compliance violations in the future – something none of the companies that withdrew would countenance, Bennett added.
Libra is currently scheduled to go live in 2020.
Dante Disparte, head of policy and communications for The Libra Association, said via email that the council will not launch the global payment system “until questions and concerns by regulators are addressed.
“This is enshrined in our long launch runway, which has helped inform regulators, policymakers and other stakeholders around the world about our commitment to responsible financial innovation and strong oversight,” Disparte said. “Our mission of financial inclusion enjoys broad global support. Over 1,500 entities have proactively reached out to the association about joining.”
Industry experts and research analysts have speculated that Libra Association departures are the result of regulatory scrutiny of the cryptocurrency, especially over whether it can thwart money-laundering efforts and adhere to know-your-customer (KYC) government rules.
In separate statements after their departure, eBay and payment software…