Facebook’s cryptocurrency payments project, Libra, has suffered a major blow with the withdrawal of seven key partners. But the Geneva-based Libra Association continues to battle on against a regulatory onslaught by adopting a charter and forming an executive team.
Set in motion earlier this year by US social media giant Facebook, Libraexternal link wants to transform the way people buy goods and send money to each other. It plans to do this by creating a cryptocurrency that converts to traditional currencies and can be sent around the world more efficiently.
Rather than bypass the existing financial infrastructure, Libra has teamed up with major players in the fields of payments, e-commerce, technology and the NGO world.
But regulators, particularly in the US, have objected to the scale and ambition of Libra, fearing it could interfere with monetary policy of individual countries. While Switzerland has outlined regulatory requirements for Libra’s operation, US Senators have helped pressure several partners into withdrawing from the scheme.
PayPal, Visa, Mastercard, eBay, Stripe, Mercado Pago and Booking.com have all announced they will end their association with Libra. For a budding payments system, the loss of such players is a body blow and has led to doubts over whether Libra can launch next year – or even at all.
But the Libra Associationexternal link said on Tuesday that it would carry on with the remaining 21 existing partners – a number it hopes to build on in future.
“The Association is eager to pursue its mission of building a better payment network, broadening access to essential financial services, and lowering costs for billions of people who need it the most,” it statedexternal link. “As an association, members will continue critical work with applicable regulators around the world.”
Last month Bertrand Perez, Libra Association managing director, told swissinfo.ch that Libra presented no threat to the financial system. The non-profit foundation was set up in Switzerland partially because it is one of the more open-minded countries towards cryptocurrencies.
The formal signing of the Libra Association charter, establishment of a council, election of a board of directors and appointment of executive team members on Tuesday shows that Libra has not given up hope. But most observers agree that Libra is now facing severe headwinds before it can get off the ground.