As U.S. and European lawmakers ramp up scrutiny of Facebook’s “Libra” cryptocurrency initiative, some corporate backers are said to be rethinking their involvement with the project, according to a report on Friday.
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Antitrust regulators in the European Union launched a probe into Libra earlier this week to examine whether the payments service could hurt competition and grant an unfair advantage over rivals. The move followed a bipartisan backlash to Libra in the United States, where President Trump, Fed Chairman Jerome Powell and House Financial Services Committee Chairman Maxine Waters, D-Calif., are just a few leading officials to raise questions about Libra’s potential to harm the U.S. economy.
The mounting criticism has rankled members of the Libra Association, a Switzerland-based organization composed of 28 entities, including Visa, Uber and Spotify, who are set to invest in the cryptocurrency platform and oversee its operations, the Financial Times reported. At least two members could drop out entirely amid concerns about regulatory scrutiny.
“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],” an official from one Libra Association member told the British publication.
Facebook declined to comment and the Libra Association did not immediately respond to a request for comment.
When Libra was unveiled in June, Facebook noted that it would not exercise any direct control over the platform. While officials from the social media giant have touted Libra as a means to instantly transfer money and serve unbanked people among its more than two billion global users, U.S. lawmakers have warned that without proper regulation, Libra could threaten global financial stability and be susceptible to bad actors.
Hesitation among Libra Association members – each of which made a non-binding commitment to contribute $10 million toward the platform – has reportedly “exasperated” Facebook officials.
“Facebook is tired of being the only people putting their neck out,” one Libra backer told the FT.
David Marcus, the head of Facebook’s cryptocurrency segment, has testified before both the Senate Banking Committee and the House Financial Services Committee in recent weeks. In prepared remarks before a July hearing, Marcus said Facebook would not launch Libra until the company has “fully addressed regulatory concerns and received appropriate approvals.”
Libra is tentatively scheduled to go live sometime in 2020.