The coalition Facebook FB formed to create its cryptocurrency project named Libra is starting to unravel. Back in June, Facebook announced that they would be playing their hand in the cryptocurrency field, stating that they would be working with financial services companies like Visa V, PayPal PYPL, and others. The news of the social media giant’s latest endeavor was initially received with acclaim from Wall Street as some analysts even went as far as to say that Facebook’s new initiative could become a worldwide currency. However, as of late, the project has decelerated as questions surrounding the continued participation of the financial services companies have surfaced.
Project Libra Losing Steam
A few days ago, news hit that Mastercard MA and other financial partners that agreed to help build and maintain project Libra’s payment network were reconsidering their involvement in the project. The announcement comes on the heels of US and European countries taking more stringent measures against the development of the project. Bruno Le Maire, France’s finance minister, said the Libra project would lead to “an eventual privatization of money, replacing weaker currencies in countries around the world and undermining states’ sovereign independence.”
The finance minister went on to comment that “These are serious concerns, and under these conditions, we can’t authorize Libra’s development on European soil.” The financial companies who were signed on to help develop the project are now warry of attracting regulatory scrutiny. Major defections could hurt the project as Facebook’s attempt to persuade consumers to swap their national currencies for a digital coin may become compromised. Regulatory scrutiny is the last thing Facebook needs as their reputation and practices have come under question as federal agencies investigate the company.
PayPal announced that they would be withdrawing themselves from project Libra. The financial services firm stated, “PayPal has made the decision to forgo further participation in the Libra Association at this time and to continue to focus on advancing our existing mission and business priorities as we strive to democratize access to financial services for underserved populations.” This is definitely not a good look for Facebook as they are now scrambling to keep the remaining financial companies on board.
For the time being it seems that Project Libra is in trouble of falling out with more of its corporate backers as it continues to face scrutiny from regulators. Regulators have serious concerns about the privacy of the project as well as the financial stability of the potential currency. Facebook has already said that investors had nothing to worry about as the company wouldn’t have unilateral control of the currency but to no avail. Wall Street will have its eyes set on how the matter unfolds in the coming days.
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