There are mounting concerns regarding Facebook’s upcoming digital currency. It now seems some of the original Libra investors are contemplating to pull out of the project completely. Growing regulatory concerns and questions regarding the viability of this project are the main causes of concern.
Libra Founders are Concerned
A lot of people were surprised when Facebook announced Libra. Not because the social media giant aims to tackle finance once again. Instead, there were plenty of questions which could not be answered all that easily. Especially in terms of regulation and policies, very little homework had been done at that time. It was a matter of time until those concerns would create a problem.
Two Libra founders have confirmed they are concerned over regulatory scrutiny. At this time, Facebook is not a licensed money transmitter. As such, they cannot issue a currency let alone one which is supposedly linked to the US Dollar. As many as three early backs are contemplating to sever all ties with this project already. That doesn’t bode well for the launch of Libra, assuming that will ever happen.
The key Stakeholders
When Libra was announced, Facebook had struck deals with major backers and stakeholders. That list includes Visa, Mastercard, Uber, and PayPal. It is unclear which of these companies are now having second thoughts. Losing either Mastercard or Visa – or potentially both – could deal a death blow to this project fairly quickly.
All of these stakeholders “invested’ in Lira prior to its launch. Since these companies will act as validators for transactions, they will need to set up the dedicated infrastructure. In most cases, a $20m investment was promised, which shows how expensive this network can prove to be in the long run. If early investors are backing out, it seems plausible to assume they will want that money back as well.
The Future of Libra
The big question is whether Libra can succeed. On paper, it doesn’t stand much of a chance based on the information currently shared with the world. In the real world, there is plenty of scrutiny and uncertainty as well. Government officials in the US haven’t taken kindly to Facebook’s plans. So much even that an official investigation could be launched in the weeks ahead.
Abroad, things are not faring much better. Facebook is on the brink of dealing with an antitrust investigation in the European Union. That in itself could postpone the Libra launch indefinitely. Combined with uncertainties in other regions, as well as early investors doubting their decisions, it is evident that Facebook has a lot of work ahead. One almost has to wonder if it wouldn’t be better to can this project altogether.
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