Facebooks alliance for the controversial digital currency Libra is crumbling: On Friday, four large participants announced their exit with the online trading platform Ebay , the credit card giant Mastercard and Visa and the payment service Stripe . A week ago, Paypal had already canceled its participation in the heavily criticized project.
According to the US media, massive regulatory resistance raised concerns among Libra partners. An important meeting is planned for Monday in the Libra Association based in Switzerland, which will manage the digital currency. Facebook had presented at the launch in the summer well over two dozen well-known companies as a "founding partner" of Libra.
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The withdrawal of Mastercard and Visa hits the project particularly hard. The world-renowned industry names gave Libra more credibility and could also provide an important interface to the classic financial world with its infrastructure. At the same time, all dropouts explicitly opened the door for later support of the Libra project.
According to previous announcements, Libra wants to make Facebook available to consumers in the coming year, but the idea is met with fierce opposition from politicians and central banks. Libra is to be backed one to one with a basket of stable currencies and government bonds according to previous plans. Although Facebook rejects concerns that the digital currency could interfere with the sovereignty of central banks. The Internet company also emphasizes that no new money will be spent on Libra - this is reserved for states.
"Of course these are not great news"
However, supervisors fear that the fund could lead to financial market disruptions given Facebook's huge user base. Skeptics also question whether the project is adequately armed against money laundering and terrorist financing. Facebook already pledged not to launch Libra until all concerns from regulators have been dispelled.
According to Facebook's ideas, Libra could initially be used primarily for cross-border transfers, later also for paying for purchases both online and in stores.
The responsible for Facebook on the project top manager David Marcus said that one should draw no conclusions about the fate of the digital currency from the departure of the partners. "Of course, that's not great news in the short term, but in a sense it's also liberating," tweeted Marcus. With so much pressure on it, it's clear that there's something in it.
