Might the Libra project see more than turbulence as key backers reconsider their support?
The Wall Street Journal reported Tuesday (Oct. 1) that marquee names such as Visa and Mastercard are mulling their ties to the crypto effort, which would see the launch of a payments network targeted for next year.
The Journal said that amid a tightening regulatory gaze, and criticism of Libra from various corners of the globe tied to privacy and security, some of the biggest backers of Libra are shunning Facebook’s requests that they support Libra publicly.
Against that backdrop, “cracks are forming” in the coalition that is currently behind Libra, and policy executives from more than two dozen of those companies are slated to attend a meeting Thursday in Washington D.C. That information, reports the Journal, comes from unnamed sources “familiar with the matter.” The D.C. meeting would come as representatives from those same companies are to meet in Geneva to approve a charter tied to Libra’s launch, and also appoint a board of directors. Should some of those backers pull out the project, Libra may collapse as it needs the partners to help fashion the payments network and bring it into various verticals, merchants and use cases.
As Karen Webster noted in this space in recent months, “igniting the Libra network, the Libra currency and Calibra wallet requires that people feel comfortable buying into using an entirely new global currency backed by an association they’ve never heard of, based in a country they’ve probably never visited — and using, at least initially, a digital wallet created by Facebook on one of two platforms that are also part of Facebook network: Messenger and WhatsApp. That’s a lot for anyone to understand and process, much less someone living in a developing country with limited education, and for whom money — and trust — may not come easily.”
The alleged backlash and wariness of the Libra backers come in the wake of Congressional hearings that in the past several months have illustrated concerns regulators have held tied to the possibility of money laundering and other activities. The Treasury Department has sent letters to firms like Visa and PayPal and Mastercard, to get a sense of how anti-money-laundering efforts would dovetail with Libra. As has been reported, the aforementioned members have nonbinding letters of intent in place but have not put up the funding ($10 million per firm) that would be tied to the project.