April 7, 2020

Why Mastercard, Visa and eBay quit Facebook’s Libra | Tech Wash


For anyone following the
troubled attempts by Facebook to create a new global
digital currency Friday the 11th of October
was a pretty dramatic day. Within the space of
about three hours, five different companies all
announced they no longer wanted to be a part of Project Libra. We at the FT had been hearing
rumours about a possible mass defection from the
scheme for quite a while. From the moment, in fact, when
David Marcus, the co-creator of this project, testified
here in Washington DC in front of Congress, and was
given something of a mauling. It was clear something
was happening last Friday when I received a text
from a source telling me that MasterCard was
about to drop out, at the same time that
my colleague Hannah Murphy in San
Francisco was hearing the same thing about eBay. And within hours, confirmations
came tumbling out, not just from
MasterCard and eBay, but also from Visa, from
Stripe, and from Mercado Pago. So what was it that brought
these companies, finally, to decide they no longer
wanted to be involved? Well my sources tell
me it was a letter, signed by two democratic
senators, Brian Schatz and Sherrod Brown, in which they
warned the payments companies that if they proceeded
with the project, their existing businesses
would come under greater regulatory scrutiny. The companies
decided they simply couldn’t afford that risk,
and so they backed out. So can Facebook proceed
with this project? Well technically, it can. And Mark Zuckerberg says
the will is still there. He is testifying in
front of Congress next week about it, in fact. But with mistrust
of Facebook being one of the few things that
still unites Democrats and Republicans it would
be a brave regulator who decides to give this
project the green light.

Leave a Reply

Your email address will not be published. Required fields are marked *