Facebook Ploughs on as Major Libra Backers Abandon Ship
In a momentous development, twenty-one organizations have signed the charter for the Libra Association – an autonomous nonprofit intended to oversee Facebook’s (NASDAQ:FB) proposed digital currency. The inaugural meeting took place in Geneva, Switzerland, where the participants reiterated their support for a cryptocurrency that could be used by unbanked individuals worldwide.
In addition to affirmations of support, the Libra Association’s twenty-one members also constituted a five-member board and, as per the Swiss law, agreed upon interim articles of association that detail the governing structure of the organization. According to these articles, most major decisions will require a vote garnering a majority within the consortium while membership changes will require an approval by two-thirds of the members. Moreover, the five-member board includes Facebook’s former blockchain head and the current CEO of the tech giant’s cryptocurrency corporate subsidiary called Calibra, David Marcus. The rest of the board membership comprises of representatives from the non-profit Kiva Microfunds and PayU as well as a member each from venture capital firm Andreessen Horowitz and Xapo Holdings Limited.
According to a press release, the Libra Association’s membership now includes Calibra, Coinbase, Xapo, Anchorage, Bison Trails, Creative Destruction Lab, Andreessen Horowitz, Thrive Capital, Ribbit Capital, Union Square Ventures, Breakthrough Initiatives, Illiad (EPA:ILD), Vodafone (LON:VOD), Farfetch (NYSE:FTCH), Uber (NYSE:UBER), Lyft (NASDAQ:LYFT), Kiva, Mercy Corps, Women’s World Banking, Spotify (NYSE:SPOT) and PayU. The organization further revealed on Monday that more than 1,500 entities have expressed interest in joining the project so far, with 180 of those entities meeting the organization’s membership criteria.
Facebook envisions Libra as a blockchain-based digital currency backed by a basket of fiat currencies which includes the U.S Dollar with a 50 percent weightage, the Euro with a weightage of 18 percent, the Japanese Yen bearing a weight of 14 percent in the basket, the British Pound having a representation of 11 percent, and the Singaporean Dollar with the residual weightage of 7 percent. The project, however, continues to face stringent opposition from policymaking and legislative quarters throughout the globe due to concerns pertaining to financial stability, money laundering and data privacy risks (read our related coverage here). France has stridently asserted that the project poses a risk to the sovereignty of national currencies while India has announced that Libra may not enjoy legal legitimacy within the country. Moreover, the Democratic U.S. House of Representatives member, Maxine Waters, has called for a moratorium on the project until all regulatory questions could be cleared.
In light of the growing scrutiny and criticism from the official quarters, many of Facebook’s partners in the digital currency project have abandoned ship in the last few days. Almost all major digital payments and e-commerce companies have exited the Libra Association including Mastercard (NYSE:MA), Visa (NYSE:V), eBay (NASDAQ:EBAY), Stripe and PayPal (NASDAQ:PYPL). According to Reuters, the only remaining payments processing firm in the Libra Association is the Netherlands-based PayU, which reportedly does not operate in the United States, Canada, and many areas in Africa and the Middle East. Moreover, Booking Holdings (NASDAQ:BKNG) – the owner of the travel sites booking.com, priceline.com, and agoda.com – has also abandoned the project.
Facebook, however, remains unfazed in the face of these high-profile departures with Dante Disparte, the head of policy and communications at Libra Association, recently informing Reuters that the flight of major backers is “a correction; it’s not a setback.” The ultimate success of this nascent project now appears to be inextricably linked to the degree of success with which Facebook and its partners are able to assure the regulators regarding the cryptocurrency’s adherence to the myriad of financial regulations spanning multiple jurisdictions throughout the globe.