The development of Libra has taken a blow after four online giants bowed out of the Libra Association. Stripe and Visa are moving away from the project to focus on their own core operations, but they’ve kept the door open for a possible return if regulatory headwinds clear, as reported by CNBC, October 11, 2019.
What Comes Next
Three of the largest global payment companies dropping out of the project seems like a huge deal, but Calibra’s head David Marcus has maintained optimism that Libra can convince regulators of their ability to integrate into the current financial system. A group of Senators urging the companies to reconsider joining the Association may have been the final red flag.
I would caution against reading the fate of Libra into this update. Of course, it’s not great news in the short term, but in a way it’s liberating. Stay tuned for more very soon. Change of this magnitude is hard. You know you’re on to something when so much pressure builds up.
— David Marcus – dmarcus.eth (@davidmarcus) October 11, 2019
Ever since Libra was announced, they have been dragged around by politicians and regulators who see this as too much of a threat to financial stability. The free flow of capital propelled by a system like Libra would make money laundering detection incredibly difficult.
This news comes just a week after PayPal announced they are temporarily dropping out of the Libra Association after a month of deliberation.
One positive takeaway from this is that Visa and Stripe still see potential in the project. Although they aren’t willing to take on the government with Facebook, they are confident that properly regulated blockchain-enabled financial networks can champion financial inclusion and ease of payments.
In light of this, the Libra Association confirmed that the first wave of members would be announced in the coming days at the first meeting of the council.
Yet to Face Wrath of Regulators
From the surface, these initial hurdles of gaining acceptance seem like the toughest part. But even if Libra was allowed to function, figuring out how to implement the United States government’s mandates while staying true to their initial vision will be the real test of their ability.
Mark Zuckerberg is set tobefore the Congressional financial services committee on October 23. David Marcus already testified before the committee and they weren’t pleased that Marcus was sent instead of COO Sheryl Sandberg or Zuckerberg himself.
This can serve as the first real litmus test for whether Libra for whether regulators are genuinely open to letting Libra launch if they are able to meet their demands. Facebook’s solitary lobbying power may not be a match for the entire banking industry.