Commentary

Facebook's Cryptocurrency Project Faces Roadblocks

Mark Zuckerberg admits that moving into cryptocurrency has been a challenge.

As we learned this week, he recently compared it to brain surgery (before adding that Facebook is kind of getting into the brain surgery business).

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Yet, putting Facebook’s cryptocurrency future in doubt, several key partners are reportedly pumping the brakes on the project.

Sources are telling The Wall Street Journal that Visa, Mastercard, PayPal Holding, and Stripe are now on the fence about formally signing onto Libra -- Facebook’s cryptocurrency initiative.

They are among 28 financial services companies that joined what Facebook has dubbed the “Libra Association,” and which are reportedly being asked by Facebook to recommit to the project next month.

However, as sources tell The Journal, some of Facebook’s Libra partners believe that the social giant has failed to sufficiently soothe concerns among government regulators.

Since its unveiling this past June, Libra has been an absolute lightning rod for legislators.

Led by Rep. Maxine Waters (D-CA), chairwoman of the House Financial Services Committee, Congress formally requested that Facebook suspend development of its blockchain strategy in July.

In a new letter to Facebook executives, Waters and fellow House members suggested that the company’s latest effort “raises serious privacy, trading, national security, and monetary policy concerns for not only Facebook’s over 2 billion users, but also for investors, consumers and the broader global economy.”

Later in July, President Donald Trump dismissed Libra as dead on arrival. “Facebook Libra’s ‘virtual currency’ will have little standing or dependability,” Trump tweeted at the time.

In response, Facebook executives have said they welcome the scrutiny from policymakers and politicians.

“The time between now and launch is designed to be an open process and subject to regulatory oversight and review,” David Marcus, Facebook’s cryptocurrency head, told the Senate Banking Committee in mid-July.

“I expect this will be the broadest, most extensive, and most careful pre-launch oversight by regulators and central banks in FinTech’s history,” Marcus said at the time.

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