Facebook has not had any breathing space since announcing their upcoming cryptocurrency project in mid-June due to the stern regulatory concerns it has been facing. Facebook came up with Libra project with the ultimate goal of banking the unbanked by bringing on board 28 payments and tech behemoths as partners.
These backing members were allegedly required to invest at least $10 million to be a part of the Libra association. However, three unnamed members are now considering pulling out of the Libra association due to growing regulatory pressure, as reported by the Financial Times.
Facebook Continues To Be In The Crosshairs Of Regulators
Late last month, Facebook acknowledged that the Libra project may be delayed or never launch at all due to concomitant concerns raised by regulators. On August 17th, NZZ am Sonntag, a local media outlet revealed that six members of the United States House of Representatives are set to meet in Switzerland to discuss cryptocurrency regulations with Facebook’s Libra the main focus.
The leader of this delegation is Maxine Waters, the Chairman of the House Financial Services Committee who has previously asked Facebook to suspend any activities on Libra moving forward until all regulatory concerns were cleared.
Now over in the UK, Facebook is facing an antitrust probe by the European Union (EU). On Tuesday, a document received by Bloomberg publicized that the European Commission was investigating Libra to determine whether it would compete fairly with its rivals. Also, the EU is investigating how Libra may be incorporated in WhatsApp and Messenger, the other Facebook-owned applications.
The escalating regulation and government-level discussions are what has caused three of the members of the Libra consortium to want to quit. Two of these firms have reportedly held private discussions regarding what their next course of action should be. One of the members noted:
“It’s going to be difficult for partners who want to be seen as in [regulatory] compliance to be publicly supporting Libra.”
Another Libra backer threatening to back out said Facebook should have first dealt with the regulators before announcing plans to launch Libra to minimize opposition. Seemingly, Libra backers are not the only ones unhappy with the dramatic turn of events.
According to the Financial Times, Facebook itself is disappointed that the Libra members are not taking the bullet for the Libra project leaving it as “the only people putting their neck out”.
Nonetheless, Some Want A Piece Of The Libra Pie
Despite the ruckus enveloping Facebook’s Libra, some new members want to join the Libra association. Last month, the president of Monex Group Inc., the parent company of the Japan-based cryptocurrency exchange Coincheck revealed that the company (Monex) had filed an application to be a part of the Libra association.
Additionally, the Winklevoss billionaire twins, Tyler and Cameroon recently announced their plans to potentially work with Facebook on the Libra project despite their old rivalry with Mark Zuckerberg.
Notably, the 27 firms constituting the Libra consortium have not yet been officially confirmed as partners. Last month, Visa CEO Alfred F. Kelly disclosed during Q3 2019 earnings call that they had only “signed a non-binding letter of intent to join Libra”. What does this mean? My guess: the three founding partners considering quitting can do so without any legal repercussions while these two aforementioned newcomers showing interest in joining Libra could soon join if they meet Facebook’s criteria.