Libra, Facebook’s proposed global digital currency, has suffered severe blows on Friday as major financial companies MasterCard and Visa Inc. ceased their support for the project. The two payment companies released official announcements that they will leave the group Friday, which was also the decision of EBay Inc., Latin Americana, and Stripe Inc.
The globally-recognized companies followed PayPal Holdings, who was one of the first to exit the group a week ago. The decisions of these companies were primarily due to the concerns of different global regulators regarding the new global digital currency.
With the exit of MasterCard, Visa, and other major companies, Libra Association has no more major payment companies as part of its group. This means that it can no longer rely on a global player to assist consumers in changing their currency to Libra to make different transactions.
As of the moment, remaining members include Lyft and Vodafone as well as venture capital, blockchain, telecommunications and technology companies, and other non-profit companies.
According to a statement released by Visa Inc., it has decided not to join Libra Association and that they will carry on with the evaluation of Libra. Visa further said that their decision would be based on many factors, such as Libra’s ability to meet all the regulatory expectations.
David Marcus, Libra project head and former PayPal head said on Twitter that customers should not read Libra’s fate from this latest development. Marcus also acknowledged that the exit of MasterCard and Visa is not good news.
Libra project head Dante Disparte also announced that they would continue to formally authorize the association the next days despite these drawbacks. He said that they remain focused on building a strong group comprising of the world’s leading financial companies, social organizations, and other partners.
Despite mentioned that although Libra Association’s makeup may grow and improve in the future, the principle of its governance, technology, and the open nature of the project guarantees the Libra network for making payments will remain stable.
Facebook plans to take Libra live as a digital currency in June 2020, together with other association members. After the announcement, Libra began to face scrutiny coming from global financial companies stating that they have serious questions that Libra should answer before its launch.
Last month, France and Germany announced that they would block Facebook’s digital currency from transacting in Europe. The two countries backed a public cryptocurrency instead of Libra. Meanwhile, Jerome Powell, U.S. Federal Reserve Chairman, said that Libra could not advance unless it addresses concerns like privacy, consumer protection, preventing money laundering and financial stability.
Meanwhile, the exits of financial companies last Friday is a sign that the scrutiny is affecting Libra’s credibility. A few days ago, Visa, Stripe, and MasterCard received a letter from senior Democratic senators. The letter contained a warning telling them that a project will spark the growth of worldwide criminal activity.
Mark Zuckerberg, Facebook Chief Executive, is set to discuss Libra before the U.S. House Financial Services Committee set on October 23. Chairman of the panel Rep. Maxine Waters has called on Facebook to stop the project many times.