According to Ars Technica, six participants in the Libra Association, a group created by Facebook to develop virtual currency, withdrew earlier this month.
Those participants, Strip, Visa, MasterCard, Mercado Pago, PayPal, and eBay, dropped out before the Libra Association held its first official meeting where participants made their “binding commitments.”
Ars Technica is calling this withdrawal an “awkward development” for the social media giant, especially since it was aiming to grow the Libra Association’s membership from 27 companies to 100 by 2020, when the Libra network is scheduled to launch. Now, the network is down to 22 companies.
Companies’ withdrawal from the association isn’t entirely surprising, especially since the Libra project has been met with heavy skepticism by regulators. One of the reasons for the skepticism is due to the Libra Association’s lack of explanation on how it will comply with “the broad range of regulations that govern financial networks,” Ars Technica says. Policymakers are also wary of Facebook in general, and aren’t confident the company can be trusted to “handle peoples’ money responsibly.”
On top of that, the Libra network will be under the sole and complete control of the Libra Association. This notion hasn’t been popular in the conventional blockchain world, mostly because blockchain participants prefer a financial system that is “outside the control of any single organization,” according to Ars Technica.
Finally, experiencing the dropout of all payment-processing companies might have possibly hurt the Libra Association the most, since these companies have the most experience with payment regulations. They might have been able to show the association the ropes to these regulations and helped them navigate through any related issues, Ars Technica says, including how get cryptocurrency to effectively interact with the conventional financial system. They might have also helped the Libra Association on the reputation front, and even minimized skepticism shown by regulators, with whom they had – and still have – the most to lose.
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