In what is being seen as one of the biggest blows to Facebook Libra so far, now Mastercard and Visa have left it too. They quoted regulatory uncertainty for a reason behind the much talked about leaving.
Proposed by the social media giant Facebook, Libra is a blockchain digital currency that Facebook has envisioned to be a global currency. Actually, the launch was scheduled to be somewhere in the 2020s, and what Facebook proposed was just the experimental code. But now it seems that with each passing day, the Libra project is losing on the companies. With Visa and Mastercard becoming the latest companies to back off and completely withdraw their support for the proposed cryptocurrency project.
Last week Paypal had announced its exit, which now had been shortly followed by eBay, payment system provider Stripe, South American partner Mercado Pago and now Visa and Mastercard. These are one of those 28 major firms that Facebook had enlisted as its launch partners in June, for the project which would have been launched by 2020. These leading firms had the task of assisting with governing the project. Losing its significant members is truly a setback for Libra.
These companies previously were a part of the Libra Association, an organization of companies that involved those from many domains viz. payment, technology, online marketplace, digital venture capital, telecommunications, and non-profit organizations. Among those who left, the majority are payment processors who have to abide by certain specific regulatory requirements that are dealing with fraud, money laundering, and sanctions enforcement. As such, it is visible why they bailed out of Facebook Libra on the face of scrutiny.
Blockchain is the answer to the world’s growing fondness and requirement for cryptocurrency or say digital currency. The technology is made up of ‘blocks’ that further involve batches of transactions. In Blockchain, what happens is that every block is linked to its previous block through the use of cryptography, which thus forms a chain in turn.
Since the world is getting smarter and becoming a global market with its market complexities and demands escalating every day, it is beyond any doubt that cryptocurrencies have become an increasingly attractive option for growing markets. It is extremely beneficial for those economies and markets that may not have a strong traditional banking infrastructure in place or has one infrastructure that lacks tight security for transactions.
The project thus unfortunately invited heavy flak and scrutiny from regulators and politicians alike. Regulators have upheld that Libra might not be a secure banking platform, and amid several risks put up, one of the risks shrieks that it could be exploited for money laundering and funding terrorism.
A spokesman from the parting Visa said, and we quote: “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.” Needless to say, their decisions come after fierce scrutiny from lawmakers across the globe.
As such, it is highly unlikely that the project gets another kick-start until all the legal, regulatory, and oversight challenges are adequately addressed. Also, it is pertinent to note that even Facebook itself warned that the on-going regulatory scrutiny might delay or may even obstruct the launch of Libra. Undoubtedly, challenges continue to loom Libra.