Facebook’s plans for launching a cryptocurrency called Libra have faced backlash from lawmakers since the day Facebook announced its plans on June 18. Politicians from Rep. Maxine Waters (D-CA) to Sen. Mark Warner (D-VA) called for the company to curtail its crypto venture. Some elected officials have gone so far as to compare the potential damage of Libra to the subprime mortgage crisis and to 9/11.
When Facebook announced Libra, it also announced 28 “founding members” in the Libra Association, the separate governance group set to be headquartered in Geneva. (The New York Times reported in late June that none of the companies identified as founding members had actually signed binding agreements.) Through more than three months of scrutiny, those partners hung around—until October.
PayPal was first to exit the Libra Association last week; on Friday eBay, Stripe, and MasterCard followed suit, in a major blow to Facebook’s cryptocurrency plans.
Additional founding members have dropped out in a domino effect.
Facebook declined to comment on the exits. But Facebook’s blockchain lead David Marcus, who spearheaded Libra, tweeted, “Special thanks to Visa and MasterCard for sticking it out until the 11th hour. The pressure has been intense (understatement), and I respect their decision to wait until there’s regulatory clarity for Libra to proceed, vs. the invoked threats (by many) on their biz.I would caution against reading the fate of Libra into this update. Of course, it’s not great news in the short term, but in a way it’s liberating. Stay tuned for more very soon. Change of this magnitude is hard. You know you’re on to something when so much pressure builds up.”
Dante Disparte, head of policy for the Libra Association, did comment on the exits: “We appreciate their support for the goals and mission of the Libra project. 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 to achieve a safe, transparent, and consumer-friendly implementation of a global payment system that breaks down financial barriers for billions of people. 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. We look forward to the inaugural Libra Association Council meeting in just 3 days and announcing the initial members of the Libra Association.”
The inciting event on Friday could have been a letter this week that Sen. Sherrod Brown (D-OH) and Sen. Brian Schatz (D-HI) sent to Visa, MasterCard, and Stripe warning them about the risks of Libra.
Amid the Friday afternoon exodus, Sen. Brown’s office sent out this statement to media: “Large payment companies are wise to avoid legitimizing Facebook’s private, global currency. Facebook is too big and too powerful, and it is unconscionable for financial companies to aid it in monopolizing our economic infrastructure. I trust others will see the wisdom of avoiding this ill-conceived undertaking.”
On Oct. 14, the Libra Association will hold a meeting in Geneva. On Oct. 23, Mark Zuckerberg will testify about Libra before Congress.
Cutting ties with Libra
Yahoo Finance will track all the dropouts here and continue to update this post whenever more companies exit.
This post was last updated on Feb. 10, 2020 at 2:20pm EST.
1. PayPal was first to drop out, on Oct. 4, and said at the time, “We remain supportive of Libra's aspirations and look forward to continued dialogue on ways to work together in the future.”
2. Ebay exited on Friday, Oct. 11, and told the Financial Times, “We highly respect the vision of the Libra Association; however, eBay has made the decision to not move forward as a founding member. At this time, we are focused on rolling out eBay’s managed payments experience for our customers.”
3. Stripe dropped out later in the afternoon on Oct. 11, and said in a statement sent to the FT, “Stripe is supportive of projects that aim to make online commerce more accessible for people around the world. Libra has this potential. We will follow its progress closely and remain open to working with the Libra Association at a later stage.”
4. MasterCard dropped out on Oct. 11 after eBay and Stripe, and sent Yahoo Finance this statement: “Mastercard has decided it will not become a member of the Libra Association at this time. We remain focused on our strategy and our own significant efforts to enable financial inclusion around the world. We believe there are potential benefits in such initiatives and will continue to monitor the Libra effort.”
5. Visa exited on Oct. 11, and said in a statement sent to press: “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. Visa’s continued interest in Libra stems from our belief that well-regulated blockchain-based networks could extend the value of secure digital payments to a greater number of people and places, particularly in emerging and developing markets.”
6. MercadoPago dropped out of the Libra Association on Friday evening, Oct. 11, according to The Verge. Yahoo Finance has reached out for comment.
7. Booking Holdings, the parent company of Booking.com, Kayak, and Priceline, waited until Monday morning, Oct. 14, to drop out, as reported by Bloomberg.
8. Vodafone British telecoms giant Vodafone, one of the biggest household names that was originally part of Libra, dropped out on Jan. 21, 2020, the first company to exit after the Libra Association was formalized at the October meeting in Geneva. Vodafone had reiterated its commitment to Libra in July, telling Yahoo Finance, “We strongly believe in financial inclusion and are excited to be part of Libra... This has the potential to be truly transformative and will benefit those who have never used, or are struggling to access, financial services around the world.”
Standing by Libra
On the other hand, some in the industry are bullish on Libra, even without its big-name backers. They are mostly fellow cryptocurrency names.
Kristin Smith of the Blockchain Association, a trade group that represents crypto and blockchain companies (but not Libra) told Yahoo Finance after PayPal dropped out that the reaction to PayPal’s exit was “overrated” and that “at this point the adoption of crypto on a mass scale is inevitable, whether it be through Libra itself or some of these other companies out there, and lawmakers know it.”
Alex Adelman, CEO of the bitcoin shopping rewards app Lolli, which has partnered with big names like Walmart and GoDaddy, says Libra is “one of the best validators of bitcoin,” and that Libra “shouldn't need Visa, Mastercard, eBay, Stripe, or PayPal to succeed.”
And some of the other Libra Association founding members have responded to a Yahoo Finance inquiry confirming that they are still on board.
Andreessen Horowitz, the highly influential Silicon Valley VC firm, tells Yahoo Finance it’s still on board, and will attend the Libra Association meeting in Geneva on Monday.
Kiva, a non-profit micro-lending platform, confirms it is still a member.
Anchorage, a cold-storage crypto company, is still in the Libra Association. Anchorage co-founder and president Diogo Monica tells Yahoo Finance, “Anchorage is dedicated to continuing the mission of the Libra Association, and is proud to be a founding member, having worked on the project from the start.”
MercyCorps, a humanitarian aid charity, is still in, and tells Yahoo Finance, “We are maintaining our relationship with the association and we remain committed to ensuring that the voice of the world’s most vulnerable people are heard in the formation of this initiative, and that digital financial services include them and their needs.”
Daniel Roberts covers bitcoin and blockchain at Yahoo Finance. Follow him on Twitter at @readDanwrite.