The walls are all but crumbling down around Facebook’s embryonic ‘cryptocurrency’ venture, as PayPal allegedly considers calling quits on Libra.
Libra Back(er)s Against the Wall
Today, a fresh batch of conjecture is boiling over, as the Financial Times reports that representatives from PayPal abstained from yesterday’s Libra association meeting. 28 backers including, Visa, Mastercard, Uber, eBay, and Vodafone were invited to the meeting, held in Washington. The objective? To settle concerns about regulatory scrutiny. Yet, according to a source, PayPay – a significant player in the association – was the only supporter not in attendance.
“It doesn’t seem that there was a lot of pre-work done with regulators,” remarked a source speaking to the Financial Times. “[Payments] companies don’t want that [regulatory scrutiny] to bleed into their businesses.”
This echoes a report from the Wall Street Journal, which alluded to payments giants Visa, and Mastercard, calling quits over fears of regulatory hostility. Further, the report highlighted a lack of transparency on Facebook’s side, implying that there was no elaboration on how Libra would be protected against illicit activity.
Who Cares? Not Facebook.
It’s difficult to ascertain just how much damage this will do. PayPay is no small-time firm, and along with Visa and MasterCard, their presence was a magnet for legitimacy. Now with support waning, Libra may be in serious trouble, and all before it even got off the ground.
One thing is clear, Facebook, for the most part, remains relatively unperturbed by the entire affair. In response to the WSJ hit piece, Libra Lead, David Marcus firmly clapped back. While addressing the inference of collapsing support, Marcus divulged that members had yet to be “formalized.”
Moreover, on the implication that Libra’s security protocol wasn’t fully disclosed, Marcus simply called “BS.”
The Calm Before the Storm?
As Marcus remains calm, so too does Facebook CEO, Mark Zuckerberg.
A transcript of leaked tapes conveying conversations between the CEO and his employees shows Zuck’s relatively laid back attitude towards the project. Echoing Marcus’ sentiment, Zuckerberg relayed several regulatory hurdles to surmount before any solid launch of the cryptocurrency.
“Finance is a very heavily regulated space. There’s a lot of important issues that need to be dealt with in preventing money laundering, preventing financing of terrorists and people who the different governments say you can’t do business with. […] So this is going to be a long road. We kind of expected this.”
Nevertheless, this stance will likely do very little to comfort the EU’s antitrust chief, Margrethe Vestager, who’s ardent opposition of Libra stems from its potential to subvert the financial industry.
In an upcoming interview with Denmark’s finance industry union, Vestager insinuated that Libra’s inception was tantamount to the creation of an isolated financial system.
“It’s a pretty new thing that we’re starting to question something that doesn’t exist yet […] the problem is that you get a completely closed ecosystem that has nothing to do with the rest of the economy,”
Regardless, it seems in spite of the regulatory, governmental, and even media backlash – Libra is likely here to stay.