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Crypto Frontline

Facebook’s Libra Losses Key Financial Companies

Facebook’s Libra Losses Key Financial Companies

Facebook’s Libra Losses Key Financial Companies
October 12
13:13 2019

 

Things continue to get worse for the cryptocurrency project launched by Facebook. The tech giant initially planned to have the cryptocurrency network in place by June 2020, but since it officially recognized its plans, a strong wave of regulatory concerns emerged, dampening the prospects for a successful implementation by the above-mentioned date.

The US Congress, Fed’s Chairman Jerome Powell, countries like Germany and France, among others, had expressed their negative feedback on the implications such a project might have on global finances.

Companies exiting the Libra Association

A week ago, PayPal Holdings Inc decided to exit the Switzerland-based company which will be in charge of operating Libra. Things got even worse on Friday, October 11th, when five other companies decided to do the same.

Mastercard, Visa, eBay, Stripe, and Mercado Pago joined the group and left the Libra Association on Friday afternoon, as the regulatory scrutiny on the project did not ease at all in the past few months. In a public statement released yesterday, Visa gave brief explanations on its latest move:

Visa has decided not to join the Libra Association at this time…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.”

David Marcus, Facebook’s head of project and former PayPal executive, acknowledged that “it’s not great news in the short term” and rightfully so, given that Libra lost all major payment companies, which means that it can no longer count on global players in order to help consumers exchange fiat with Libra and vice-versa.

According to a recent Reuters report, a pair of senior Democratic senators wrote to Mastercard, Visa, and Stripe, telling them to be “wary of a project that will foreseeably fuel the growth of global criminal activity”.

It’s hard to figure out how much did this count on the decision to leave the Libra Association, but it’s obvious these payment companies are concerned about the developments from the past few months.

Maybe a global cryptocurrency payment system on social media is a too ambitious project and until Facebook will manage to convince regulators that there is no danger for global finances, Libra seems to be a project put on hold.

The news had not been too positive for cryptocurrencies, since Bitcoin, Ether, XRP, LTC, and other majors ended Friday on the negative. Interestingly,  market participants continue to price in negative events related to Facebook’s project, even though there’s no link with the traditional cryptocurrency market.

As we’ve talked recently, ICOs managed to raise approximately $2 billion during the first half in 2019, with private and retail investors still showing that there are some projects worth investing in.

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