Mastercard, Visa, eBay Drop Out of Facebook’s Libra Payments Network The Wall Street Journal.30 mins ago AnnaMaria Andriotis, Peter Rudegeair © fabrice coffrini/Agence France-Presse/Getty Images The biggest financial companies that Facebook Inc.recruited to launch a world-wide cryptocurrency-based payments network have backed out of the project, threatening to derail an ambitious initiative to remake global finance before it ever gets off the ground.
Visa Inc., Mastercard Inc., Stripe Inc.and eBay Inc.said Friday they were withdrawing from the coalition of companies that had originally signed on to help launch the libra cryptocurrency, following PayPal Holdings Inc., which dropped out of the Libra Association last week.
The moves came after lawmakers, central bankers and regulators expressed deep concerns about the libra project.
The loss of four of the largest payments companies in the world leaves Facebook without much of the muscle it assembled for libra, a digital currency it hoped would make it a player in e-commerce and global money transfers.The project now mostly hinges on smaller payments companies, telecommunications providers, venture-capital firms, e-commerce merchants and nonprofits.
“I would caution against reading the fate of Libra into this update,” David Marcus, the Facebook executive overseeing the project, wrote Friday on Twitter.“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.”
While some of the companies left open the possibility of rejoining the network in the future, the loss of Visa and Mastercard is an especially painful setback for libra.
The credit and debit cards that run over their networks would have made it easier for consumers to buy the digital coins.
“Our ultimate decision will be determined by a number of factors, including the Association’s ability to fully satisfy all requisite regulatory expectations,” a Visa spokesperson said in an email.Mastercard believes “there are potential benefits in such initiatives and will continue to monitor the Libra effort,” a spokesperson said.
For Facebook, the withdrawals imperil one of the company’s two major strategy shifts announced in the past year.
The other, a push toward more encrypted messaging, was also called into question earlier this month when Attorney General William Barr asked the company to delay implementation, citing public safety.
Both projects to some extent were designed to lessen the social-media giant’s near-complete dependence on targeted advertising for revenue.
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CNN 1 Cancel SETTINGS OFF HD HQ SD LO Lawmakers Are Spooked by Facebook’s Libra Cryptocurrency.
Here’s Why The Wall Street Journal.See more videos SHARE SHARE EMAIL What to watch next Lawmakers Are Spooked by Facebook’s Libra Cryptocurrency.Here’s Why The Wall Street Journal.6:22 Trump announces partial deal with China ABC News 31:04 Esports competitor banned for supporting pro-democracy protests in Hong Kong FOX News 1:25 Trump: Is Shepard Smith leaving because of bad ratings? CNN 0:44 Jane Fonda arrested at climate change protest CBS News 0:24 Ronan Farrow alleges NBC News knew of complaints against Matt Lauer long before firing NBC News 3:55 New fears raised about ISIS resurgence as Turkish military operation in Syria continues MSNBC 5:04 Trump suggests Shepard Smith left Fox due to ratings The Washington Post 0:42 Turkish forces push deeper into Syria amid intense fighting Associated Press 2:03 Miller spars with reporters over comparisons between Hunter Biden and Ivanka Trump Reuters 1:11 Impeachment, Donald Trump, and Congress; how does it work? USA TODAY 1:37 US and China reach partial trade deal ABC News 2:48 Iranian women allowed to attend international soccer match FOX News 1:37 Exclusive: CNN goes inside an illegal AR-15 factory CNN 5:04 Man drives five hours for surgery insurance won’t cover CBS News 2:09 FAA under fire after independent report found systematic failures in approval of Boeing 737 Max NBC News 1:31 UP NEXT Coming in the wake of multiple privacy scandals and public-relations fiascoes, Facebook’s approach to Libra was uncommonly cautious, with the company pledging to move slowly and work with regulators.
It said its initial goal with Libra would be to make international financial transactions and remittance payments cheaper and more accessible, and it committed to turning over full control of the project to the Libra Association.
When Facebook unveiled the project in June, it announced that 27 other companies and organizations had agreed to back it.
The idea was that merchants including eBay, Uber Technologies Inc.and Spotify Technology SA would accept libra as a form of payment, and that Mastercard, PayPal and Stripe and would enable consumers and merchants to convert their national currencies into and out of libra.
Lawmakers and regulators were quick to criticize Facebook for not supplying enough information about libra’s defenses against money laundering and other financial crime.In response, Facebook pledged not to launch libra until regulators grew comfortable with the project.
Mr.Marcus, the network’s architect, insisted that libra wouldn’t pose a threat to global financial stability.
The regulatory backlash stunned the projects backers.Several companies that initially signed onto the project believed that Facebook and the Libra Association had overstated their involvement when it unveiled the project, people familiar with the matter said.Facebook described them as “founding members,” yet they had signed nonbinding letters of intent to join the association that gave them the option to withdraw at any time.
The pressure on libra’s financial partners intensified after the U.S.
Treasury Department sent letters to Mastercard, PayPal, Stripe and Visa asking for a complete overview of their compliance programs and how libra would fit into them.
Earlier this month, The Wall Street Journal reported that Visa, Mastercard and other financial partners were reconsidering their involvement in the network.Mr.
Marcus pledged to keep the project on track.
“I can tell you that we’re very calmly, and confidently working through the legitimate concerns that Libra has raised by bringing conversations about the value of digital currencies to the forefront,” he wrote on Twitter earlier this month.“Change of this magnitude is hard and requires courage + it will be a long journey.”
Facebook has shown no signs of dropping its effort to convince lawmakers and regulators that its digital currency initiative poses no threat.
On Wednesday, the House Financial Services committee said Chief Executive Mark Zuckerberg had agreed to testify in a one-man hearing titled “An Examination of Facebook and Its Impact on the Financial Services and Housing Sectors.” That hearing is scheduled for Oct.23.
Libra’s remaining partners are set to gather Monday in Switzerland to formally sign on to the project.
“Although the makeup of the Association members may grow and change over time, the design principle of Libra’s governance and technology, along with the open nature of this project ensures the Libra payment network will remain resilient,” Dante Disparte, the head of policy and communications for the Libra Association, said in an email.
Write to AnnaMaria Andriotis at [email protected] and Peter Rudegeair at [email protected].
