Facebook’s plans for launching a cryptocurrency called Libra have faced backlash from lawmakers since the day Facebook announced its plans on June 18. Politicians from Rep. Maxine Waters (D-CA) to Sen. Mark Warner (D-VA) called for the company to curtail its crypto venture. Some elected officials have gone so far as to compare the potential damage of Libra to the subprime mortgage crisis and to 9/11.
When Facebook announced Libra, it also announced 28 “founding members” in the Libra Association, the separate governance group set to be headquartered in Geneva. (The New York Times reported in late June that none of the companies identified as founding members had actually signed binding agreements.) Through more than three months of scrutiny, those partners hung around—until this month.
PayPal exited the Libra Association last week; on Friday eBay, Stripe, and MasterCard followed suit, in a major blow to Facebook’s cryptocurrency plans.
Facebook declined to comment on the exits. But Facebook’s blockchain lead David Marcus, who spearheaded Libra, tweeted, “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.I would caution against reading the fate of Libra into this update. Of course, it’s not great news in the short term, but in a way it’s liberating. Stay tuned for more very soon. Change of this magnitude is hard. You know you’re on to something when so much pressure builds up.”
Dante Disparte, head of policy for the Libra Association, did comment about the exits: “We appreciate their support for the goals and mission of the Libra project. We are focused on moving forward and continuing to build a strong association of some of the world’s leading enterprises, social impact organizations and other stakeholders to achieve a safe, transparent, and consumer-friendly implementation of a global payment system that breaks down financial barriers for billions of people. Although the makeup of the Association members may grow and change over time, the design principle of Libra’s governance and technology, along with the open nature of this project ensures the Libra payment network will remain resilient. We look forward to the inaugural Libra Association Council meeting in just 3 days and announcing the initial members of the Libra Association.”
The inciting event on Friday could have been a letter this week that Sen. Sherrod Brown (D-OH) and Sen. Brian Schatz (D-HI) sent to Visa, MasterCard, and Stripe warning them about the risks of Libra.
Amid the Friday afternoon exodus, Sen. Brown’s office sent out this statement to media: “Large payment companies are wise to avoid legitimizing Facebook’s private, global currency. Facebook is too big and too powerful, and it is unconscionable for financial companies to aid it in monopolizing our economic infrastructure. I trust others will see the wisdom of avoiding this ill-conceived undertaking.”