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Facebook's Libra currency abandoned by major financial companies

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Facebook's Libra currency abandoned by major financial companies

By Pete Schroeder, Shanti S Nair and Katie Paul

 

2019-10-12T001247Z_1_LYNXMPEF9B002_RTROPTP_4_FACEBOOK-CRYPTOCURRENCY-PAYPAL.JPG

FILE PHOTO: FILE PHOTO: Small toy figures are seen on representations of virtual currency in front of the Libra logo in this illustration picture, June 21, 2019. REUTERS/Dado Ruvic

 

(Reuters) - Facebook Inc's <FB.O> ambitious efforts to establish a global digital currency called Libra suffered severe setbacks on Friday, as major payment companies including Mastercard <MA.N> and Visa Inc <V.N> quit the group behind the project.

 

The two companies announced they would leave the association Friday afternoon, as did EBay Inc <EBAY.O>, Stripe Inc. and Latin American payments company Mercado Pago. They join PayPal Holdings Inc <PYPL.O> which exited the group a week ago, as global regulators continue to air concerns about the project.

 

The latest exodus leaves the Libra Association without any remaining major payments companies as members, meaning it can no longer count on a global player to help consumers turn their currency into Libra and facilitate transactions.

 

The remaining association members, including Lyft and Vodafone, consist mainly of venture capital, telecommunications, blockchain and technology companies, as well as nonprofit groups.

 

"Visa has decided not to join the Libra Association at this time," the company said in a statement. "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."

 

Facebook's head of the project, former PayPal executive David Marcus, cautioned on Twitter against "reading the fate of Libra into this update," although he acknowledged "it's not great news in the short term."

 

Libra will press ahead with plans to formally charter the association in three days despite the setbacks, Dante Disparte, its head of policy and communication, said in a statement.

 

"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," he said.

 

"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."

 

Facebook announced plans to launch the digital currency in June 2020 in partnership with other Libra Association members. Almost immediately afterwards, the project faced relentless scrutiny from global regulators, who said it raised a host of serious questions that the group had yet to answer.

 

France and Germany last month pledged to block Libra from operating in Europe and backed the development of a public cryptocurrency instead. And U.S. Federal Reserve Chairman Jerome Powell suggested the project could not advance before addressing serious privacy, money laundering, consumer protection and financial stability concerns that must be addressed.

 

The rapid succession of exits by major financial companies Friday afternoon suggested that scrutiny was taking its toll.

 

Three days earlier, a pair of senior Democratic senators wrote to Visa, Mastercard and Stripe, telling them to be wary of "a project that will forseeably fuel the growth in global criminal activity."

 

"If you take this on, you can expect a high level of scrutiny from regulators not only on Libra-related payment activities, but on all activities," Senator Sherrod Brown and fellow Democratic Senator Brian Schatz wrote in the letters.

 

Brown said in a statement after the announcements on Friday that the companies had been "wise to avoid legitimising Facebook's private, global currency."

 

Facebook Chief Executive Mark Zuckerberg is scheduled to discuss the project when he testifies before the U.S. House Financial Services Committee on Oct. 23. U.S. Representative Maxine Waters, who chairs the panel, has repeatedly called on Facebook to shelve the project.

 

(Reporting by Munsif Vengattil and Shanti S Nair in Bengaluru, Pete Schroeder in Washington and Katie Paul in San Francisco; Editing by Shinjini Ganguli and Daniel Wallis)

 

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-- © Copyright Reuters 2019-10-12

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When it gets popular they'll be begging to join. The current global financial players like their monopoly the way it is and will club together to resist change as long as they can.

The fee structure these legitimate companies set currently are outrageous frankly

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On 10/12/2019 at 7:08 AM, wombat said:

when Thai gold shops accept crypto currency in exchange for gold i will believe it has been accepted as money.
until that happens the whole crypto thing smells of scam.

Maybe Thai gold shops aren't accepting it in exchange for gold yet, but several well known gold shops in more developed territories have accepted Bitcoin for gold for years:
https://comparegoldprices.com/bitcoin/

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On 10/12/2019 at 2:22 AM, z42 said:

When it gets popular they'll be begging to join. The current global financial players like their monopoly the way it is and will club together to resist change as long as they can.

The fee structure these legitimate companies set currently are outrageous frankly

I think Libra will still launch, but as some kind of a fork of Bitcoin or on some kind of s*coin like Ethereum or XRP.

Then it won't matter who else is in on Libra.
 

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The answers to the question "Why they left" and "Why Switzerland" and related pleading and chastising were the most amusing in that hearing:
https://www.c-span.org/video/?465293-1/facebook-ceo-testimony-house-financial-services-committee

 

Seems all in the room, including the questioners already knew the answer Sugarmountain was evading: it's because the US are not the bastion of freedom - especially financial freedom - which they continue to assert to be, and haven't been for generations, if ever!

 

Imagine if he spoke to them in the tone and content of the way they did to him, and routinely do to others.

It's really just like talking to a decentralized king, where you know they can just squash you and your company if you resist their public beating and witch hunt.


One could tell he was angry as hell about the way so many of them distorted his answers, and asserted blatant falsehoods, but he couldn't afford to argue with these pompous public parasites.

I hate and don't use Facebook, but for the first time, I kind of felt sorry for the guy having to put up with this world financial overlords' "hearing" of themselves.

Edited by twig
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Where the F is Satoshi LOL. He knew exactly what he was doing with his disappearance act. Poor old BookFace, he was looking so frustrated. Spotted the dangers of opening a FB account many many years ago and was always regarded as a paranoid nut job for highlighting my concerns. Odd how things turn out. Probably going to be the same for this Bitcoin Ponzi scheme eh? 

 

I watched the whole hearing too Twig. US of A - Land of the Free 🤣. A classic example of hypnotised group-think. If it wasn't so serious it would be funny. 

 

 

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Does anyone know that Libra is not cryptocurrency? It is just a digital currency. Although companies left the association, some members remain there to drive it. Facebook can make it work and help the unbanked and cross-border transactions a lot. 

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