Visa, MasterCard and others reconsider joining Facebooks Libra
In a statement after the press release, the companies expressed respect for and value for the potential of the project, but chose to focus on other areas. Stripe spokesman said in a statement that the company supports the project aimed at making online commerce more accessible to people around the world, and Stripe hopes to have an opportunity to work with the project in the future.
A spokesman for Visa said the company would continue to evaluate the project. Our final decision will depend on many factors, including the ability of the association to fully meet all the necessary regulatory requirements. Visas interest in Libra stems from our belief that block-chain-based networks can extend the value of secure digital payments to more places, especially in emerging and developing markets.
Proponents of Libras encrypted currency are dwindling as lawmakers question how this will affect sovereign currencies and how the projects leaders can ensure consumer rights. As of Friday afternoon, Mercado Pago and PayU were the only two payment companies that continued to support the project.
David Marcus, who led the Libra project, was previously President of PayPal and testified in the U.S. House of Representatives in July. At the time, lawmakers asked him if Facebook would delay the plan until the necessary regulations were enacted. But then the MP said Marcus did not give an affirmative answer, and his answer was not a promise.
Libra Association, a non-profit organization that manages encrypted currencies, said Friday afternoon it would continue the project. Dante Dispart, head of policy and communications, said in a statement: We are committed to promoting and continuing to build strong associations of world leaders, social impact organizations and other stakeholders to achieve a secure, transparent and consumer-friendly global payment system that can break the financial barriers of billions of people. We look forward to the first Libra Association Council meeting in three days and announce the first members of the association.
Facebooks digital currency is about to brake in its infancy? PayPal announced its withdrawal from Libra
Facebooks digital currency project was braked just as it started.
PayPal recently announced its withdrawal from the Facebook-led digital currency project Libra, another blow to the Libra project after the white paper was challenged on June 18.
PayPal exits the Libra project
Libra is a virtual encrypted currency launched by Facebook and belongs to the block chain financial product. Libra Association is managed by independent non-profit members, while PayPal is one of the first 28 founding members of Libra Association. The remaining members include technology enterprises, financial enterprises and non-profit organizations.
On October 4, local time, PayPal, one of its founding members, announced its withdrawal from the Libra Association.
PayPal said in a statement that the company decided to abandon further participation in the Libra project launched by Facebook and would continue to focus on its current mission and business priorities. Meanwhile, PayPal said, We will continue to support Libra and look forward to continuing our dialogue on ways to cooperate in the future. Facebook has always been PayPals long-term strategic partner and will continue to work with and support Facebook.
According to foreign media reports, PayPals withdrawal from Libra was mainly concerned that Facebook had not done enough to dispel suspicions about Libra projects or money laundering.
Faced with PayPals withdrawal, Dante Dispart, director of policy and communications at Libra Association, responded in an interview with the media that it takes courage and perseverance to participate in the Libra project. Its an opportunity to make things better, improve financial inclusiveness, and a long and challenging journey. Commitment to this mission is more important than anything else. Now we realize that lack of commitment. Its better than knowing later.
Visa and MasterCard are in a wait-and-see state
According to foreign media reports, PayPal, Visa and MasterCard signed a non-binding letter of intent to cooperate with 25 other founding members companies and agreed to invest $10 million each. So far, however, no company has paid a penny. At the same time, no Libra Association member has publicly supported the Libra project.
In an interview with the media, Jorn Lambert, Executive Vice President of MasterCard Digital Channel, said MasterCards support for Libra was premised on its compliance with all regulations and regulatory requirements. MasterCard is very concerned about security, privacy and compliance, which is also the focus of the companys participation in Libra projects.
The project is still at its earliest stage, and we are not a member of any organization and no one is a member of any organization, Al Kelly, chief executive of Visa, said in an interview. We will not join any organization that we believe does not meet our standards and those of the regulatory bodies we respect around the world.
Meanwhile, AlKelly said Visa would await the advice of the regulators before becoming a full member of the association.
In addition, according to media reports, with strong opposition from government officials, Visa and MasterCard have reconsidered their participation in the Libra project.
Although the situation is not optimistic, Dante Dispart says that every company involved in the project must make its own risk assessment. Meanwhile, he said the remaining founding members of Libra Association planned to meet within 10 days, and another 1,500 companies were interested in joining the Libra Association.
Earlier, Facebook had said that it would absorb about 100 members of Libra Association before the Libra Block Chain Network was officially launched (expected in 2020).
Libra project has been publicly opposed by many governments
Libra, like Bitcoin, is a digital currency based on block-chain technology, but its nature tends to be an investment product rather than a currency. Libras goal is to become a widely recognized trading medium, i.e. a stable currency.
Stable Currency: A password currency that refers to anchoring the real world currency price. The leading stable currency USDT issued by Tether, which is similar to the well-known currency circle, is USDT for US$1. For each USDT issued, Tether increases the actual stock of US$1 in the account accordingly.
Libra White Paper shows that its circulation is determined by the user market, the purchase of new Libra in 1:1 legal tender will increase, and the reserve will increase the real assets of the same legal tender. Conversely, when demand decreases, Libra will be destroyed, and the legal tender in the reserve will be reduced accordingly. Only Libra Association can determine the production and destruction of Libra.
In addition, because of the difference of currency issuing mechanism, the appreciation and depreciation of Bitcoin depend on the demand for Bitcoin, while the appreciation and depreciation of Libra depend on the fluctuation of foreign exchange market, because Libra anchors a stable basket of currencies.
After the release of Libras white paper, it was resisted by many governments.
The Swiss Financial Market Regulatory Agency (FINMA) said that Libra must undergo a Swiss money laundering review and begin the approval process only after receiving legal inquiries, and that Libra needs to obtain a payment system licence based on the Swiss Financial Market Infrastructure Act (FMIA), which will comply with additional requirements for services beyond the payment system.
According to Xinhua News Agency, German and French finance ministers issued a joint statement on September 14 in Helsinki, Finland, reiterating the importance of monetary sovereignty and opposing Libras implementation in Europe. In the statement, the two countries argued that Libra had failed to respond adequately to potential risks. We believe that monetary power belongs to national sovereignty and should not be controlled by private entities.
Benoit Coeure said the new virtual currencies required stringent approval standards and promised to take stringent regulatory measures against them. Libras stable currencies are largely untested, especially on the scale required for global payment systems, and they pose many serious risks related to public policy priorities.
In the United States, Federal Reserve Chairman Powell said that the Federal Reserve had set up a working group to investigate Libras privacy, money laundering, consumer protection, financial stability and so on.
Source: Zhitong Financial Editor: Wang Honggui, nf7326