Nov
18
At least one astrology website says Libras are cooperative, diplomatic, gracious, fair-minded, and social. Like most zodiac descriptions, it’s broad enough so that just about anyone can say, “Yep, that’s me.”
But the other Libra—Facebook’s recently announced cryptocurrency—seems to be garnering a less positive image.
Not that Facebook has given up hope. As of this writing, the Libra Association’s official Facebook page most recent entry positively states, “Libra is a cryptocurrency that will be available globally.”
But that was posted on October 10, which, astute readers will no doubt observe, was nearly six weeks ago. A lot has changed since then. It began the very next day with the news that major Libra partners had bailed. This, from CNN, was typical:
Facebook (FB) is now facing an exodus of companies from its Libra cryptocurrency effort. Mastercard (MA), eBay (EBAY), Visa (V) and Stripe … all confirmed on Friday that they would not be members of the governance organization for the Libra cryptocurrency developed by Facebook. PayPal said last week it would pull out of the organization. The firms were part of a group of more than two dozen nonprofits and companies originally listed as “founding members” of the Libra Association, which is intended to be an independent overseer of the cryptocurrency.
In an indisputable show of class, Libra co-creator David Marcus responded on the same day with this tweet:
Special thanks to @Visa and @Mastercard for sticking it out until the 11th hour. The pressure has been intense (understatement), and I respect their decision to wait until there’s regulatory clarity for @Libra_ to proceed, vs. the invoked threats (by many) on their biz.
Marcus followed up:
I would caution against reading the fate of Libra into this update. Of course, it’s not great news in the short term, but in a way it’s liberating. Stay tuned for more very soon. Change of this magnitude is hard. You know you’re on to something when so much pressure builds up.
On October 16, PYMTS.com reported on details Mastercard shared regarding its decision:
Mastercard said that cryptocurrencies need to give consumers protections that include privacy and security of both information and transactions. They also must provide a level playing field for everyone, Mastercard said. That would include merchants, mobile network operators and financial institutions. They must comply with all laws and regulations, and that includes money-laundering protections and operating within the economic structures of whatever country in which it trades.
Mastercard’s statement is a master’s class in leaving unsaid, “We’re not so sure Libra meets those criteria.” It went on to express confidence in blockchain technology overall:
“We believe in the transformative power of blockchain. We hold the third-largest number of blockchain patents and patent applications, and from our provenance solution to commercial payments, our exploration of blockchain applications span our entire business ecosystem,” Mastercard said.
The following day—October 17—Finextra ran a story headlined “Fed governor warns of ‘core’ regulatory challenges facing Libra.”
Facebook’s Libra project will need to address core legal and regulatory challenges before it can facilitate a single payment, US Federal Reserve governor Lael Brainard has warned … Among the issues Libra needs to address, says the governor, are compliance with KYC rules; demonstration of consumer protections; and efforts to define the financial activities that the various players in the Libra ecosystem are conducting in order for jurisdictions to assess whether existing regulatory and enforcement mechanisms are adequate. More broadly, Brainard told her audience that global stablecoin projects such as Libra could challenge bank business models. “If consumers and businesses reduce their deposits at commercial banks in favor of stablecoins held in digital wallets, this could shrink banks’ sources of stable funding, as well as their visibility into transactions data, and thereby hinder banks’ ability to provide credit to businesses and households,” she suggested.
A week later, Facebook CEO Mark Zuckerberg endured one of many grillings before a Congressional subcommittee. Finextra reported:
Democratic Representative Nydia Velázquez stated that Facebook has a “credibility issue” which poses a problem to its attempt to enter financial services. “Mr Zuckerberg, we do not want to ‘break’ the international monetary system,” Velázquez said, referencing the Facebook founder’s motto, “Move fast and break things.”
On another matter, Zuckerberg’s later testimony defending the banning of “offensive” content while not fact-checking—indeed, while permitting—provably false political advertising hasn’t exactly moved Americans to come to his defense.
So in many ways it hasn’t been a great month for Zuckerberg. On the other hand, he may find some consolation in being the fifth-richest person in the world.