The announcement of the impending Libra Project by Facebook earlier this year has grabbed many of the headlines in the crypto-sphere over the past while. Not only has it had real involvement with the increasing value of cryptocurrencies, like Bitcoin and others, but has made world governments sit up and pay attention to the crypto-world. They are now discussing ideas around regulation for cryptocurrencies and digital cash tokens.
The Facebook-led initiative involves 27 other tech, service, and financial companies as a part of the network. It is touted as having the potential to become the World’s first global currency.
Unfortunately, for the Geneva-based foundation, they have hit a wall of sceptics coming from the US Senate, the European Union, and other regulatory boards, as well. Both France and Germany have pushed for a full-on ban of the currency within the borders of their countries too.
One of the top scepticisms come as a result of Facebook’s involvement in the project. Governments have had past run-ins with Facebook for failing to secure user data in the past, so regulators fear that trusting them with people’s money could prove devastating in the future.
Facebook has guaranteed that bank-level security would be implemented by the foundation and have consistently reminded naysayers that Facebook is only a small wedge in the entire pie and that other fin-tech and banking facilities would be involved to bring their expertise to the fore. Unfortunately, it looks like two of the biggest banking mainstays might be reconsidering their involvement in the whole idea.
PARTNERS VACILLATE AT THE STARTLINE
Project ‘Libra’ has not even hit the ground running yet and there is news from reputable sources within the Wall Street Journal, and Bloomberg, that some of the fin-tech banking backbone of the project may change their minds on their ongoing involvement in launching Libra. Among the names are banking stalwarts: Visa, Mastercard, Paypal, and Stripe.
The ‘cold feet’ comes at a time where the Libra foundation seeks to affirm their partnerships for the creation of the cryptocurrency. Up until this point, all 28 members have only signed non-binding letters. Later this month final commitments will need to be in place so that the project can progress. The association has agreed to allow the companies to join the foundation without having to put up the initially agreed-upon $10,000 dollars each, which was initially needed to provide the reserves to tether the stablecoin to.
The company realises that there could be significant delays in the roll-out of the currency, thanks to the opposition it is receiving from all areas.
SO, WHATS THE FALL OUTGOING TO BE?
Losing top banking brands, like Visa and Mastercard, will put a big dent in the credibility of the proposed coin. The two name-brand payment solutions are synonymous with banking excellence and are operated in most major countries in the world. You can almost bet on the fact that when someone tells you they own a cheque or credit card, there is a good chance that it will have either the Visa or Mastercard emblem on it.
The two companies, along with Paypal and Stripe represent the Libra Foundations primary experience in the banking world. Should they turn tail and run, the project could be up for a massive challenge in filling their respective vacancies.
Unfortunately, the USA and other big nations have big political sway. These international superpowers have the ability to dictate terms to companies like this that make a killing off service rights to these nations. So when the government speaks in opposition to the new proposed currency, you can bet your bottom dollar that Visa and Mastercard do not want to upset the apple cart and risk losing trade within these countries’ borders.
Libra can only hope that if these companies pull out, they go alone and do not pull other companies out with them. Any brand that might have joined because Visa or Mastercard was on board may also decide to rethink their involvement.
The potential exit from this specific market place may open up a gap for other competition though, such as American Express and others.
In order for Libra to ensure that they are able to roll out, they need to maintain a resolute face against their opposition. Helping find a solution to the regulation should be the objective, rather than to turn tail and run.
We can only hope that the foundation finds its strength and that it does not capitulate at this late hour. Its success has only had a positive effect on Bitcoin, which is good for Bitcoin first businesses like ours and investors like you.
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