Visa, Mastercard, Ebay, Stripe and Mercado Pago followed Paypal and move away from Facebook’s Libra Foundation. These companies announced this on Friday. The exodus happened after weeks of discussions among governments in Europe and the United States. Lawmakers consider Libra a threat to consumers and the financial system because it’s a new global payments network.
Leaders in the United States, France and Germany have openly expressed their grudge against Libra. Two U.S. senators even send letters to Visa, Mastercard and Stripe, asking them to reconsider their partnership with Libra. The political pressure already made Paypal step aside last week.
Next week there’s an inaugural association meeting. After that all parties would officially be involved in Libra. Every company involved would have to deal with policymakers and governments. This isn’t something Visa, Mastercard, Paypal, Stripe and Mercado Pago want to deal with, because they are already in the payment business.
Libra Foundation almost official
The foundation started with 28 project members, until the exodus happened. As a result there are now 23 left. It’s unknown whether the foundation will fill up these seats. The only company left in the payments category is PayU, an electronic payments company from The Netherlands.
Libra will press on to formally establish its foundation, despite these setbacks. The charter will be signed on Monday. They are still planning to launch a digital currency in 2020. David Marcus from the Libra Foundation remains optimistic, despite the exodus. He said that ‘It’s not great news for the short term, but in a way it’s liberating’.
Leaving a door open for Libra
Even though Mastercard, Visa and Ebay left Libra, they didn’t close the door permanently. Stripe underlines Libra’s potential in a statement to the Financial Times, and is willing to work with the foundation at a later stage. Visa expects more work to meet regulation guidelines. However, also this payment company is keeping its eyes on Libra.
“Visa’s continued interest in Libra stems from our belief that well-regulated blockchain-based networks could extend the value of secure digital payments to a greater number of people and places, particularly in emerging and developing markets,” Visa said in a statement to the same newspaper.
Central banks having been sleeping
Even though bitcoin has been around for ten years and a great variety of cryptocurrencies have been developed ever since, central banks have been sleeping. It took a company with 2.1 billion users worldwide to make central banks see the potential of cryptocurrencies. European Central Bank board member Benoit Coeuré said libra was a wake-up call for central banks.
After the announcement of libra several countries panicked and immediately said they would ban the cryptocurrency. France and Germany were among them. They even considered launching an European cryptocurrency. The chief economist from ING Bank thinks something like this will certainly happen. He said that central banks will issue their own digital currencies within three years.
Also published on Medium.