Facebook's efforts to bring its Libra cryptocurrency to the world has hit another hurdle in the guise of MasterCard and Visa pulling their support for the digital coin project.
The Financial Times reported that following a meeting between backers on 14 October, the two payment companies abandoned the Geneva-based Libra Association. The two firms were joined by eBay, fintech startup Stripe and payments company Mercado Pago, in pulling support for Libra.
There is increasing scrutiny and pressure from financial regulators and politicians in the US and Europe over the potential impact Libra could have on the stability of the global financial world, alongside concerns over the potential for Libra and its link to Facebook to undermine its would-be users' privacy.
A Visa spokesperson told the Financial Times that Visa has decided not to join the Libra Association "at the time". And added: "We will continue to evaluate and our ultimate decision will be determined by a number of factors, including the Association's ability to fully satisfy all requisite regulatory expectations."
MasterCard has yet to release a statement and eBay effectively echoed Visa's sentiments.
Libra Association's policy chief Dante Disparte shed little light on the impact of the suite of companies withdrawing their support of the upcoming cryptocurrency.
"We are focused on moving forward and continuing to build a strong association of some of the world's leading enterprises, social impact organizations and other stakeholders," said Disparte. "We look forward to the inaugural Libra Association Council meeting in just three days and announcing the initial members of the Libra Association."
07/10/17: Facebook Libra's future in jeopardy after PayPal pull-out
Facebook's nascent cryptocurrency has suffered another blow after major financial partner PayPal withdrew its support for the project on Friday.
The company did not specify why it was withdrawing its support for Libra, but reiterated its ongoing support for Facebook as a strategic partner in other matters.
"PayPal has made the decision to forgo further participation in the Libra association at this time and to continue to focus on advancing our existing mission and business priorities as we strive to democratise access to financial services for underserved populations," a statement from the company read.
"We remain supportive of Libra's aspirations and look forward to continued dialogue on ways to work together in the future. Facebook has been a longstanding and valued strategic partner to PayPal and we will continue to partner with and support Facebook in various capacities."
Online payments firm PayPal is one of 28 founding members listed on the Libra website, alongside financial firms such as Mastercard, Visa and Stripe, as well as various tech companies, venture capitalists and others. In exchange for an initial $10 million contribution to the project's budget, these members are set to form the governing council of the Libra Association, which will steer the ongoing development of the project once it gets up and running and Facebook relinquishes control.
However, multiple partners are thinking of following PayPal's lead, according to rumours. The Wall Street Journal reported that Mastercard and Visa were among those eyeing the door, spurred in part by the increasing interest from regulators and lawmakers.
According to the Financial Times, EU regulators have put a number of tough questions to the social media company, covering issues from money laundering and financial predictability to data privacy risks. US lawmakers have also been questioning whether the digital currency would be subject to securities regulations, and whether it would be able to comply with them.
