Facebook’s plans for their Libra token were thrown into chaos over the weekend as more big-money backers followed PayPal’s lead and withdrew their support. Five firms, including payment giants Mastercard and Visa, all withdrew their names from the Libra Association, following the negativity from regulators surrounding the proposed project. This leaves 21 of the 27 original investors still in the program, but there is every chance that more could follow.
Payment Processors Take the Lead
Those withdrawing from the project alongside Mastercard and Visa were two other payment processors, Stripe and Mercado Pago, and shopping giant eBay, events that Facebook’s Libra head David Marcus called “not great news in the short-term”, although he warned against people “reading the fate of Libra into this update”. The startling development means that Libra no longer has any payment processors among its backers, suggesting that any traction it hopes to get on this front will have to be through separate deals. Visa was one of the only companies to comment on its decision to detach itself from the project, citing “the association’s ability to fully satisfy all requisite regulatory expectations” as a condition of any potential return.
Long Time Coming
The first rumblings of discontent regarding the Libra Association were heard back in August when the Financial Times spoke to insiders within some backers who said that they were troubled by the negative attention the project, and by extension they themselves, were receiving. Facebook themselves were also described as being fed up with the fact that none of the backers had stepped up to defend them during the early regulatory onslaught against Libra. This apparent schism showed itself with PayPal’s decision to quit last week, which seems to have given others the confidence to do the same. Despite pushing on with development, at least publicly, Zuckerberg and Marcus will face another grilling later this month when they testify in front of the House Financial Services Committee over their plans for Libra, and one wonders when the hassle will become too much for Facebook to bother with any longer.
