Facebook’s cryptocurrency Whitepaper release created a lot of excitement all over the world, especially in the Financial Services market. What made the announcement even more massive was the fact that 27 members from the FinTech world were announced as members of the Libra Association.
Visa, Mastercard, Uber, Paypal, Coinbase, and many other large firms have joined the association. However, reportedly, seven out of twenty-seven members have also signed a non-binding contract with the Association. To respect the ethnicity of the partnership, the company executives refrained from naming themselves.
This means that their members can choose to restrict or allow the use and marketing of Libra arbitrarily. There is no binding contract on the members; they could also easily back out of the project.
Why Hasn’t Any Other Member of Libra Association Spoken on the Whitepaper Release?
Regulators all around the world have raised concerns over the issue. The accusations related to privacy, centralization within the company, and the uncertain legality of cryptocurrencies have also influenced the members to keep a back-up in case it all goes south.
Joe Lallouz, the CEO of Bison Trails and a member, also had initial concerns. He told,
“My initial reaction was: ‘You don’t have the best track record from a data privacy perspective.’ Facebook’s reputation around data privacy and being trustworthy is against the crypto ethos.”
However, the Blockchain team at Facebook was able to convince Joe of its plans. Nevertheless, until now, not a single bank has joined the endeavor. Mastercard, one of the most esteemed members from the Financial Services Industry, has clearly expressed half-hearted support.
It is also visible in the post-release market environment as apart from Facebook and Libra Association, none of the other partners has publicly supported the project. Jorn Lambert, Mastercard’s executive vice president for digital solutions, told in an interview that they were looking to “explore, co-create, and test new ideas.” The diplomatic answer suggested a lack of interest or commitment at the moment.
Furthermore, the members were expected to invest $10 million each to provide security to earn validation rights. However, while the deal has been finalized, no actual exchange has taken place until now. The development of the cryptocurrency is still in progress and is far from implementation at the moment.
“[Facebook plans] to engage in healthy dialogue and debate with our fellow founding members, and to welcoming additional members over the coming months. We know this will take time and it won’t be easy, but together we will be able to make the Libra mission a reality,”
There are many companies which could benefit from partnering up with Libra. These include gaming apps, e-commerce websites, and remittance solutions. Hence, they have also heard from other interested organizations to join the Association. However, regulatory uncertainty remains to be the primary reason for concern for now.
Maxine Waters, the chairwoman of the House Financial Services Committee, has scheduled a preliminary from Facebook executives about their plans. The hearing is scheduled for 17th July 2019, until then the Social Media Giant has been asked to stop further developments.
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Nivesh from Engineering Background is a full-time Crypto Analyst at Coingape. He is an atheist who believes in love and cultural diversity. He believes that Cryptocurrency is a necessity to deter corruption. He holds small amounts of cryptocurrencies. Faith and fear are two sides of the same coin. Follow him on Twitter at @nivishoes or mail him at nivesh(at)coingape.com