FinTech News
Some Libra Backers Reportedly Spooked by Regulatory Scrutiny
Back in June, following months of rumors, Facebook officially unveiled plans for the cryptocurrency Libra. In that announcement it was revealed that, while Facebook was taking the lead on the project and would also be introducing the Calibra crypto wallet, there were several partners that had signed-up to support the token at launch. However since then Libra has drawn criticism from several regulators — and the heat may be getting to some supporters.
According to a report by Financial Times (via Gizmodo) at least two brands have expressed concerns about Libra’s regulatory reception and are considering withdrawing from the project. Additionally Business Insider reports that companies are worried about publically supporting Libra lest they draw negative attention to themselves. In fact they note that announced partners Uber, Mastercard, PayPal and others have shirked questions about whether they still backed Libra. Instead many of these brands seem content to let Facebook bear the brunt of the push back. That said, BI got two Libra Association members — Vodafone and Mercy Corps — on the record to comment on their continued support, with a spokesperson for the former saying, “Vodafone strongly believes in financial inclusion and so we remain committed to the Libra Association, helping it to fully address the concerns of lawmakers and regulatory authorities.”
When asked about the status of the Libra Association and its members, a Libra head of policy and communications Dante Disparte told BI, “The 28 organizations that intend to become the initial founding members are currently working together to draft a charter and establish the guiding principles. Once the charter is ratified, we will be in a better position to comment on specific membership commitments.” He added, “At this time, all of the initial 28 organizations are still participating in this process.”
To say that regulators and lawmakers have been skeptical of Libra since its announcement would be an understatement. In addition to Democratic members of the U.S. House of Representatives Committee on Financial Services asking Facebook to reconsider their plans, Trump-appointed Federal Reserve chairman Jerome Powell has also shared concern. For its part, Facebook says it intends to address all of these concerns and won’t launch the project until regulators are satisfied.
It seems likely that Libra’s problems will continue to get worse before they get better. Thus it’s understandable that the companies under pressure might want to lay low. At the same time, having partners cut and run could further imperil the project. All this begs the question, will Libra ever make it to market? We’ll have to wait and see.
