The Rise and Fall of Facebook’ Libra Before Even its Launch
Facebook’s ambitious cryptocurrency, Libra project is collapsing as partners, one by one are abandoning the initiative. Recently, Vodafone became the eighth member by announcing its exit from the project. A Vodafone spokesperson said in a statement that the telecommunication giant wants to focus on its in-house initiative, M-Pesa, to bring affordable financial services to the world’s poor.
On 18th June 2019, Facebook Inc. revealed its ambitious plan to establish its cryptocurrency – Libra. The project relied on the coalition of companies called a Libra Association and it oversees the major decisions regarding the coin. The Libra Association, is a Geneva based non-profit organization and had 28-members initially including Uber Technologies Inc., Andreessen Horowitz and Thrive Capital etc.
Facebook has always faced a rhetorical war on the regulatory issues related to data privacy. And after the announcement of Libra, many policymakers and economic bureaucrats around the world have harped on the cryptocurrency, as according to them, the project is potentially catastrophic to the financial world.
After the announcement, the project got in trouble with skeptical regulators around the world. In September 2019, France and Germany said that Libra currency posed financial risks to the various sectors and consumers too. At a meeting of Euro zone finance ministers in Helsinki, France’s finance minister, Bruno Le Maire, and his German counterpart, Olaf Scholz said in a joint statement, “France and Germany consider that the Libra project, as set out in Facebook’s blueprint, fails to convince that those risks will be properly addressed,” they said. Both countries blocked Libra in Europe and backed development of a public cryptocurrency instead.
However, the Association got its first shock when, PayPal broke up with the coalitions on 4th October 2019 by stating that it wants to focus on its core business. In a statement PayPal said, “We remain supportive of Libra’s aspirations and look forward to continued dialogue on ways to work together in the future.”
After Paypal, six largest companies in the world including Visa, Mastercard, Stripe, Mercado Pago, eBay, and Booking Holdings also withdrew their support from the project. After the loss of Vodafone, Libra Associations is now left with 20 members involving Uber, Lyft, Spotify and Venture-Capital firm, Andreessen Horowitz.
Their association has set minimum $10 million investment for interested companies excluding the non-profits firms to join. Every investor will have one vote for important issue. The association aims to have 100 members by the currency launch which is planned in 2020.
After Vodafone’s exit, Dante Disparte, Head of communications of Libra Project explained in a statement, “Although the makeup of the association members may change over time, the design of Libra’s governance and technology ensures the Libra system will remain resilient… The association is continuing the work to achieve a safe, transparent and consumer-friendly implementation of the Libra payment system.”
To make this work, now it will need to rely on the support of smaller payment companies, venture-capital firms, nonprofits and telecom providers. After all these, Facebook still claims that its vision to have its own international currency, and based on the company’s partners, is unstoppable.
Neha writes articles on sectors including medicine, food, materials, and science & technology. A qualified statistician, she has the ability to observe and analyze the trends in global markets and write compelling articles that help CXOs in decision making. She is a bookworm and loves to read fiction, lifestyle, science and technology. Neha comes with 6 years of experience in content writing and editing that involves blog writing, preparation of study materials and OERs.