Facebook Libra pushes ahead despite hostilities
The Libra Association is shedding members under pressure from on high.
The Libra Association, the organisation built to manage the Facebook Libra cryptocurrency, started with 28 organisations behind it.
Now the Association has signed itself into more formal existence with just 21 backers left.
- Mercy Corps
- Andreessen Horowitz
- Bison Trails Co.
- Ribbit Capital
- Breakthrough Initiatives, L.P.
- Spotify AB
- Calibra, Inc.
- Thrive Capital
- Coinbase, Inc.
- Uber Technologies, Inc.
- Creative Destruction Lab
- Union Square Ventures
- Farfetch UK Limited
- Women's World Banking
- Kiva Microfunds
- Xapo Holdings Limited
- Lyft, Inc.
Nice business you have here... be a shame if something happened to it
Those original members who are no longer with the Libra Association include Visa, Mastercard, PayPal, eBay, Stripe, MercadoLibre and Booking Holdings, at least some of which were pressured to drop out by US members of congress.
"In response to questions from Congress about the potential risks posed by Libra, Facebook deflects the responsibility of addressing these risks onto potential Libra Association members, such as your companies," senators Brian Schatz and Sherrod Brown purred to Stripe, Mastercard and Visa in
vaguely explicitly threatening letters.
"Facebook is currently struggling to tackle massive issues... and it has not demonstrated an ability to bring those failures under control. You should be concerned that any weaknesses in Facebook's risk management systems will become weaknesses in your systems that you may not be able to effectively mitigate.
"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 payment activities."
This is kind of ironic.
First, because we now have the US Congress accusing another organisation of "struggling to tackle massive issues" and having "not demonstrated an ability to bring those failures under control".
Second, because card companies have a history of lobbying their way out of tighter anti-money laundering obligations. For example, in 2011, there was a push to make prepaid cards count towards the $10,000 declarable cash limit on the US-Mexico border on account of the fact that prepaid cards are "the currency of criminals" (to quote the IRS) and because people were bringing prepaid cards across the US-Mexico border to skirt the $10,000 cash limit.
This fairly obvious initiative perished under the weight of lobbyists, who successfully argued their way out of it by saying it would give prepaid cards a bad vibe.
"The proposed rule could result in bank-issued prepaid cards being stigmatized as second-class financial products in comparison to debit cards and credit cards," argued Visa's associate general counsel at the time.
Money talks, it seems. And historically, it talks quite a bit louder than many legitimate concerns. In this light, it should come as no surprise that Libra is hiring on lobbyists to help push its agenda in Washington.
Publicly at least, the Libra Association appears unconcerned and says it plans to go ahead with it all.
"The Association is eager to pursue its mission of building a better payment network, broadening access to essential financial services, and lowering costs for billions of people who need it the most.
"The Libra Association confirmed that over 1,500 entities have indicated interest in joining the Libra project effort, and approximately 180 entities have met the preliminary membership criteria shared at libra.org," it said.
The vibes of most news pages suggest otherwise though.
Those "glum Zuckerberg" photos are truly the gift that keeps on giving. There might be more for the library in the near future, too. The next big date for Libra is 23 October, when Mark Zuckerberg is due to testify before congress, primarily around Libra.
It's not yet clear which way Libra will go, so that date promises to be informative – and potentially entertaining.
Disclosure: The author holds BNB and BTC at the time of writing.
- Happy fifth birthday to Ethereum. What has it learned?
- Binance: World’s largest cryptocurrency exchange launches in Australia
- Bitcoin breaks US$11,000 as gold hits record high and dollar drops
- Eftpos is testing an AUD stablecoin on Hedera Hashgraph for micropayments
- Visa invites crypto aboard as US banks given green light to hold keys