It’s crunch time for Facebook’s Libra cryptocurrency project as all but one major payment provider has dropped out of the consortium to bring banking to the masses.
Out of the 28 companies that joined the program, only 21 remain – and the only financial company hanging on is PayU, based in The Netherlands.
In recent days Visa, Mastercard, Stripe, eBay, PayPal, Booking Holdings – owner of Booking.com – and Mercado Pago – which is South America’s largest payment provider – have all withdrawn support.
A lot of big guns are still in the game – including Facebook, Uber, Lyft and Spotify.
The backtracking follows regulators in G7 countries warning the cryptocurrency could harm the world’s financial system and that member companies would come under extreme scrutiny.
The G7 report did not specify Libra, but vaguely spoke about ‘global stablecoins’.
Regulators stifling innovation
Despite the disappointment of losing so many influential backers, Libra spokesman Dante Disparte claims many others are queuing to join the project.
“More than 1,500 organisations have expressed an interest in joining this effort,” he said.
“Even though aspects of that have been difficult in the last few months.”
He also dismissed the G7 report and calls from US senators threatening strict oversight.
“Their comments stifles private market innovation,” added Disparte.
“At some level it confounds the regulatory process and the law-making process of free market economies.
“The interference created a problematic precedent for the state of private sector innovation.”
What is Libra?
Meanwhile PayU is talking up the project, arguing Libra is the way forward.
“We believe that the design of the Libra ecosystem has the potential to address a number of societal needs,” a PayU spokesperson said.
Libra is designed to take over from the US Dollar, Pound and other currencies as an online, cross-border payment system, especially for around 2 billion people who cannot access a bank account to make payments online – which is where the problems start.
Facebook and other companies see Libra as a walled garden for consumers who are exposed to their products and services.
The G7 countries see Libra as a threat to the current financial world order and are determined to bring tight regulation to bear.