MasterCard was one of the first entities to back out of the fledgling Libra Association, but it certainly wouldn’t be the only one. The Facebook-backed stablecoin project has been mired in controversy since it began, and has met one roadblock after another as it tries to find solid ground. Even one of the project’s own board members, Patrick Ellis, has said that there is “no solid strategy” for a successful launch of the initiative, and MasterCard’s co-president of operations in the Asia Pacific region, Ari Sarker, has alluded to a lack of a clear, concise plan for the company’s decision to withdraw. Now, MasterCard’s top executive has chimed in, saying the decision to step away was also due to a Libra business model that was absent organized and complete solutions necessary for a genuine financial system.
In a conversation with the Financial Times, MasterCard CEO and president Ajay Banga explained that things started to become murky after executives began to dissect Libra’s charter and really dig in on what the stablecoin hoped to accomplish. He asserted that the inclusion of Libra’s own crypto wallet, Calibra, added another layer of confusion, stating, “It went from this altruistic idea into their own wallet. I’m like: ‘this doesn’t sound right.’ If you get paid in Libra… which go into Calibras, which go back into pounds to buy rice, I don’t understand how that works.”
Banga also had difficulty putting his head around the concept of how the Libra Association was going to turn a profit, adding, “When you don’t understand how money gets made, it gets made in ways you don’t like.”
MasterCard was one of the first, along with Visa, Stripe and others, to officially bow out of the project last October. It didn’t offer many details regarding its decision, but Visa explained at the time that Libra had not shown that it could “satisfy all requisite regulatory expectations,” a statement that has now been echoed by MasterCard’s input.
The Libra Association has yet stepped forward to address these concerns publicly as more members continue to drop out. There were initially 28 entities designated as founding members; however, eight have now left. Vodafone is the most recent, announcing its decision to vacate its position on the organization last month.
MasterCard, like most large financial firms, has tried to keep crypto at arm’s length. However, it hasn’t necessarily been bearish on all aspects of the ecosystem. It has been involved in a few blockchain projects, and has even reportedly been looking at hiring internal employees to work on crypto wallet initiatives.
As support for the Libra Association continues to wane, the group still hopes to introduce the stablecoin at some point in the future. Initially, a launch had been expected for last year, prior to the global controversy, but then delayed to sometime before this summer. However, that goal is now in doubt, as there doesn’t seem to be any financial regulator willing to give it the green light. Even the former president of Switzerland, where the Libra Association is based, has asserted that Libra has failed.
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