At least two of the 28 entities that have signed on for Facebook’s planned Libra currency are now getting nervous about the project, according to a new report from the Financial Times. And Facebook is just as worried about being the only company currently with its “neck out”, as regulators push back against the plan to create a new digital currency from thin air.
The companies, which some have dubbed the “crypto mafia”, include heavy hitters from Silicon Valley and Wall Street, such as Uber, Spotify, Visa and Mastercard. They’re all partners in the Libra Association, a new organisation based in Switzerland that is coming under scrutiny from governments around the world.
The Chair of the US Federal Reserve, EU antitrust regulators, the French Finance Minister, the Senate Banking Committee, the House Committee on Financial Services and the Secretary of the US Treasury have all expressed doubts about Libra, so it’s easy to see why some companies might be getting cold feet.
But these companies aren’t just worried about Libra’s future as a digital currency. Their main concern seems to be that government regulators may want to look deeper into each company’s primary business after they’re done tearing Libra to shreds.
From the Financial Times:
Two of the project’s founding backers told the FT they were concerned about the regulatory spotlight and were considering cutting ties. Another backer said they were worried about publicly supporting Libra for fear of attracting the attention of agencies who oversee their own businesses.
“I think it’s going to be difficult for partners who want to be seen as in compliance [with their own regulators] to be out there supporting [Libra]” one of the founding partners said.
With Libra’s backers not speaking out in support of the digital currency, Facebook in turn has become exasperated by the members, according to two people close to the project.
Another backer told the Financial Times that there wasn’t enough planning before the organisation announced plans for Libra. It’s become clear that no one within the group anticipated the amount of regulatory scrutiny that this endeavour would ultimately received.
Libra has been a sideshow thus far, despite the fact that it hasn’t even been launched yet. Scammers are using Libra as a way to entice victims on YouTube, most US financial regulators are sceptical of Libra, and Democratic Congressman Brad Sherman even said that Facebook’s cryptocurrency could be worse than the September 11 terrorist attacks.
Something smells fishy about the entire enterprise, to say the least, and almost nobody thinks that Libra is a good idea. As countless people have pointed out, Libra is going to use blockchain when it doesn’t even need to be on blockchain.
And the new report from the Financial Times makes clear that even people on the inside are unsure about Libra’s future. If there’s anything that global finance leaders love, it’s uncertainty.
Good luck with your fake money mafia, folks. You’re going to need it.