Five more firms are leaving from Facebook’s Libra association

Just days before Facebook’s planned Libra association members meeting, eBay, Visa, Mastercard, Stripe and Mercado Pago have made the decision to not move forward with the Facebook initiated Libra cryptocurrency project.

Just last week, PayPal announced its withdrawal from Libra Association. Now other payment firms (Visa, Mastercard, Stripe and Mercado Pago) also leaving, Facebook’s Libra ambition to become a global payment system has met a major blow.

Payment firms in Libra association play an important role wherein consumers using the services from payment firms like Visa or Mastercard could easily access Facebook’s Libra stable coin. PayU is the only firm remaining in the payment category of the Libra Association.

Statements from firms leaving Facebook’s Libra association

• eBay spokesperson tells The Financial Times that, “We highly respect the vision of the Libra Association; however, eBay has made the decision to not move forward as a founding member. At this time, we are focusing on rolling out eBay’s managed payments experience for our customers.”

• Stripe said in a statement: “Stripe is supportive of projects that aim to make online commerce more accessible for people around the world. Libra has this potential. We will follow its progress closely and remain open to working with the Libra Association at a later stage.”

• Visa spokesperson said, “Visa has decided not to join the Libra Association at this time. We will continue to evaluate and our ultimate decision will be determined by a number of factors, including the Association’s ability to fully satisfy all requisite regulatory expectations”.  

Why firms are leaving Libra council membership

An ongoing struggle to get information on how Libra plans to address risk raised by lawmakers is cited as a possible reason for members leaving.

Recently US senators, Sherrod and Brian sent a letter to the CEOs of Visa, Stripe, and Mastercard asking to reconsider their association with Libra project. Given the risk project poses to the financial system, senators have urged the firm to reevaluate before considering to proceed.

It is unclear to what extent the Libra team is working towards addressing regulatory concerns. As per some public reporting, Libra association members have struggled to get sufficient details from Facebook about the management of risks raised by regulators.

This is what worrying especially payment firms as they have a regulatory responsibility to ensure that their system is not used for money laundering, criminal activity funding, etc. Now, these payment firms are starting to realize that Libra might make it hard to meet these requirements. Libra has been silent on how they plan to manage these risks making the payment firms worried, hence the exit.