It’s unlikely that Mark Zuckerberg expected the widely negative response that his Libra stablecoin project has received. The Facebook founder and CEO has had a difficult time convincing anyone that it’s a viable solution to the world’s banking issues, and this sentiment doesn’t appear to be ready to change anytime soon. Zuckerberg will try once again to convince U.S. lawmakers that the project has merit, but the road that has brought him this far is paved with failed intentions.
When it looked like Libra would receive support from companies such as Visa, MasterCard, Stripe and PayPal, lawmakers stepped in to issue gentle warnings to the companies that it wouldn’t be a very good idea to officially back the project. Two U.S. lawmakers penned a letter to the companies’ CEOs, reminding them of the risks Libra has to consumers and mainstream finance. PayPal had already pulled its support last week and others, including Visa, MasterCard, eBay and Stripe have followed, as well. The losses put the project at further risk of never fully getting off the ground.
One of the biggest reasons that regulators and governments are concerned is because Facebook is so big – hundreds of billions of customers big. It has already shown that it isn’t capable of adequately protecting user data, as several breaches have revealed, but Facebook asserts that this shouldn’t a consideration. Its involvement, according to the company, is minimal and it will only have one vote in the Libra Association, the organization that will manage the project.
However, a closer look reveals something different and shows that regulators are correct in being cautious. Of the Libra Association’s 27 founding members (provided they all stay in place), 15 have ties to Facebook. Andreessen Horowitz, for example, is a founding member and also a Facebook investor, as well as an investor in four other projects tied to the Libra Association. Marc Andreessen sits on the company’s board. Another Facebook investor and board member, Peter Thiel, is also an investor in projects of two other Libra Association members.
Many countries have already announced that they won’t allow Libra to be used within their borders and the European Union (EU) is now pushing for new rules that could be implemented for the EU in its entirety. Japan has joined from the outside, looking to take that EU suggestion to a whole new level and make the rules global. It seems like the only major friend Facebook has lately for Libra is IBM.
Facebook had initially thought that it would be able to have Libra ready to go this past summer, based on the fact that it believed it was too powerful to be stopped. As soon as reality set in, it figured out that more time would be needed and then set a potential launch of June of next year. Based on what has transpired over the past month, and what is still to come, Libra will most likely be delayed even further and, with many of its backers jumping ship, may even never survive.
Editor’s note: This article has been updated.
New to Bitcoin? Check out CoinGeek’s Bitcoin for Beginners section, the ultimate resource guide to learn more about Bitcoin—as originally envisioned by Satoshi Nakamoto—and blockchain.