Several partners from Facebook’s Libra project are reportedly expressing caution about the venture as regulators question the impact of the digital asset and the social media giant’s track record.
Executives at seven of the project’s corporate partners, who spoke anonymously due to ongoing negotiations, told the New York Times they’ve signed non-binding agreements. According to the report, the companies don’t necessarily have to promote or use Facebook’s cryptocurrency, Libra, which is expected to be released next year. They also say they can abandon it if issues arise.
The project has drawn negative attention from international and US lawmakers. Chair of the House Financial Services Committee, Maxine Waters, announced on Monday that she will hold a hearing on July 17 to review Facebook’s plans for Libra. The Senate Banking Committee will hold another Facebook Libra hearing on July 16. Regulators are expressing concern over data privacy, security and Facebook’s track record.
When Facebook rolled out the controversial project earlier this month, the social network also announced the formation of the Libra Association, a non-profit consortium of 27 financial institutions, venture capital firms, tech companies and nonprofits that will oversee the initiative. Major players such as Visa, Mastercard, Coinbase and PayPal are on board.
The Libra Association intends to govern the project, distributing control among its many members. Facebook will have a single vote, just like the rest of the partners, thereby relinquishing power in an effort to allay concerns about its high-profile legal and public relations problems concerning user privacy, corporate concentration and censorship.
However, Libra is expected to launch on Facebook’s core platforms, WhatsApp and Messenger, over which it maintains full control, and Libra’s partners are now treading cautiously amidst pushback from within.
For example, several employees at the crypto exchange Coinbase expressed concerns about the partnership due to Facebook’s privacy issues, according to the New York Times.
The paper also reports that Facebook approached several legacy financial giants, including Goldman Sachs, JP Morgan Chase and Fidelity, all of whom declined to join the association. The sources named regulatory concerns as a key reason.
Business competition is another factor. Facebook’s goals are comprehensive. It aims to transform the global financial system, starting with cross-border remittances, by introducing its new coin to its massive user base.
The digital asset is part of the company’s larger plans to provide financial services through its new subsidiary Calibra, which is targeting the world’s unbanked – roughly 31% of the global population.[the_ad id="42537"] [the_ad id="42536"]