Visa, Mastercard, Others Reconsider Involvement in Facebook's Libra Network
Facebook Inc. assembled to build a global cryptocurrency-based payments network. Mastercard Inc. and other financial partners that signed on to help build and maintain the Libra payments network are reconsidering their involvement following a backlash from U.S. and European government officials, according to people familiar with the matter. Wary of attracting regulatory scrutiny, executives of some of Libra’s backers have declined Facebook’s requests to publicly support the project, the people said. Their reluctance has Facebook scrambling to keep Libra on track. Policy executives from Libra’s more than two dozen backers—a group called the Libra Association—have been summoned to a meeting in Washington, D.C., on Thursday, according to people familiar with the matter. On Oct. 14, representatives from the companies are slated to meet in Geneva to review a charter for the Libra Association and appoint a board of directors, according to a memo reviewed by The Wall Street Journal. Major defections could imperil Libra, Facebook’s attempt to persuade consumers to swap their national currencies for a digital coin that could be used to pay for goods and services on the internet. Without a network of financial partners that could help transfer currencies into Libra and global retailers to accept it as a form of payment, Libra’s reach would be limited. When it unveiled the project in June, Facebook said Libra could change the entire financial system, giving consumers a new way to move money across borders. The project’s backers saw the payments-network effort as a long-shot way to profit on Facebook’s 2.4 billion monthly active users. After watching popular social-media company Tencent Holdings Ltd. come to dominate the market for Chinese digital payments with WeChat Pay, some payments companies agreed to take part in Libra to avoid missing out on the next big thing. Facebook’s David Marcus testifies about Libra at a Senate committee hearing in July.Photo:saul loeb/Agence France-Presse/Getty Images Facebook, which worked in secret for more than a year to develop Libra, has broad ambitions for the project as part of a shift away from its nearly complete reliance on targeted advertising. Facebook Chief Executive Mark Zuckerberg is steering the social-media company to more private and encrypted communications, and Libra could offer a means of providing financial services through those channels. In announcing the project in June, the company said it hoped to provide basic financial services to people around the world who lack bank accounts and to save some of the $25 billion “lost by migrants every year through remittance fees.” SHARE YOUR THOUGHTS Would you ever consider using the Libra cryptocurrency to make an online purchase? Join the conversation below. Some analysts have been bullish that Libra could help Facebook diversify its revenue base and potentially transform the digital consumer economy over the long term. Yet government officials and central bankers were quick to criticize the project, citing concerns about how the network would protect users’ privacy and prevent criminals from using it to launder money. David Marcus, the Facebook executive in charge of the project, endured two days of tongue-lashings from members of Congress over the summer for the lack of details about how the new cryptocurrency would work as well as the company’s past missteps on data privacy. Federal Reserve Chairman Jerome Powell told legislators he had “serious concerns” about Libra and the company’s timetable of launching it next year. Privately, U.S. regulators have leaned on Libra’s backers. The Treasury Department sent letters to companies including Visa, Mastercard, PayPal Holdings Inc. and Stripe Inc. asking for a complete overview of their money-laundering compliance programs and how Libra will fit into them, people familiar with the…
Like to keep reading?
This article first appeared on wsj.com. If you'd like to keep reading, follow the white rabbit.