Facebook Libra Backers Back Out

A week ago we covered a Wall Street Journal article highlighting potential trouble for Facebook’s Libra cryptocurrency, as multiple backers were reconsidering their commitment to the project.

Fast-forward a week and things have only gone from bad to worse. As Bloomberg reports, PayPal was the first to announce they were leaving on October 6, with Visa, Mastercard, eBay, Stripe and Mercado Pago following suit. Each of these companies provided a brief statement, expressing their interest in monitoring Libra’s progress. Nonetheless, without these companies’ support, Libra is left without a single payment processor in the U.S.

The high-profile exits follow increased pressure from U.S. senators, who cautioned Mastercard, Visa and Stripe about backing the currency. Since Facebook first announced the Libra project, governments around the world have been critical of the endeavor, expressing concern about how the cryptocurrency will impact financial markets. In the days leading up to the companies pulling their support, senators cautioned them about how Libra could impact their broader payment business as well.

Critics are mixed about whether these high-profile defections spell doom for Libra or a new opportunity. Michael Pachter, an analyst for Wedbush Securities, told Bloomberg TV that he “didn’t think Facebook can do this by itself. Short of a big bank stepping in like JPMorgan, I don’t think this could ever happen.”

As SiliconANGLE highlights, however, several other companies emphasized their support, “including Kiva, Mercy Corps, Andreessen Horowitz, Anchorage and Xapo. Arguably, the change sees Libra look more like a startup now with the lack of mainstream company support.”

The news comes days before the Libra Association is scheduled to meet to sign a charter agreement. It’s probably a safe bet there will be far more to talk about in the wake of these defections.

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