Earlier this year, Facebook stunned the global finance industry when it announced plans to launch a new, blockchain-based payment platform called Libra. The cryptocurrency-like stablecoin was already backed by some of the biggest players in the finance industry, each chipping in $10 million to join the self-governing Libra Association. Poised for a near-immediate launch, Libra promised to completely reshape the global banking, remittance, and payments status quo. Almost as quickly, however, the tide turned as regulators took an increasingly hostile stance to the project. Now, just a few months after its announcement, Libra’s future is far from certain.
In this post, we’re taking a look at five recent news stories that paint a less-than-rosy picture for Facebook’s proposed cryptocurrency-like payment platform.
1. PayPal officially withdraws from Libra Association. Last week, PayPal issued a statement confirming that it had “made the decision to forgo further participation” in the Libra project. While PayPal didn’t elaborate on its reasons for leaving the Libra Association, the Financial Times reported that Facebook’s failure to get early buy-in from regulators was a deciding factor in the split. PayPal’s statement said that the company was “supportive of Libra’s aspirations” and looked forward to “continued dialogue on ways to work together in the future.”
2. Visa and Mastercard signal likely departure from project. Bloomberg reported last week that the payment giants were also considering withdrawing from the Libra Association over concerns that the project could harm their relationships with regulators. Citing sources close to the credit card firms, the report claims that Facebook “oversold” regulatory support for Libra to their partners. Not wanting to sour relationships with those regulators, both Visa and Mastercard may soon decide to pull the plug on their Libra Association memberships.
3. Regulators increasingly skeptical of Facebook’s plans for Libra. Earlier this week, German Finance Minister Olaf Scholz said he was “very, very critical” of Facebook’s planned cryptocurrency, noting that private companies should not be allowed to create currencies. Similar sentiments have been echoed by regulators across the globe, including France’s Finance Minister Bruno Le Maire, who said last month that his agency would block Libra’s launch in the E.U.
4. Zuckerberg walks back Libra’s planned 2020 launch. When Libra was officially announced back in June, Facebook representatives claimed that the payment platform would launch sometime in 2020. Late last month, following intense hostility from regulators and lawmakers, Facebook CEO Mark Zuckerberg walked back this claim to a more ambiguous “at some point soon” during an interview with Nikkei’s Asian Review.
5. Ripple chief suggests Libra won’t be up and running until 2023 … at the earliest. Speaking with Fortune this week, Ripple Labs CEO Brad Garlinghouse took an even more skeptical view of Libra’s situation, stating “I would bet that Libra… let’s say, by the end of 2022, I think Libra will not have launched.” Garlinghouse is hardly a neutral observer, however, as Libra presents a direct challenge to Ripple’s similarly positioned payment platform.