Facebook’s Libra cryptocurrency faces a pivotal meeting of backers on Monday, days after the ambitious project to bring digital coins into mainstream commerce suffered a severe setback when major payment firms quit.
Mastercard and Visa abandoned the Geneva-based Libra Association on Friday, as did eBay, fintech startup Stripe and payments company Mercado Pago.
The exodus followed warnings from politicians and regulators, from the United States to Europe, that Libra risked upsetting global financial stability, undermining users’ privacy and facilitating money laundering.
The latest withdrawals followed the departure of PayPal from the Libra Association earlier this month, and leave Facebook without the backing of any major payments firms for the project, due to launch by June 2020.
At the meeting, which will take place in Geneva, members will agree interim articles of association, said a spokesman for Vodafone, one of the highest-profile companies remaining in the project.
Articles of association are typically written rules that lay out how a company or organization is governed.
The Libra Association will also appoint a board at the meeting, the Wall Street Journal reported this month.
A spokeswoman for the Libra Association declined to comment on the meeting.
The group said this month that it would give details after the meeting of the 1,500 “entities” that have indicated “enthusiastic interest” to take part in the project.
The association, whose remaining 22 members include ride-hailing firms Uber and Lyft, also consists of non-profit organizations, venture capital groups, and blockchain firms.
But the departure of major financial firms meaning it can no longer count on a global player to help consumers turn their currency into Libra and facilitate transactions. This presents a new stumbling block for Libra’s efforts to convince regulators and politicians about the coin’s safety.
France pledged last month to block Libra from operating in Europe, while the Bank of England laid out high hurdles it must meet before its launch. U.S. Federal Reserve Chairman Jerome Powell has also suggested the project could not advance before concerns were assuaged.
Libra, announced as Facebook expands into e-commerce, will be backed by a reserve of real-world assets, including bank deposits and short-term government securities, and overseen by the Libra Association.
The structure is intended to foster trust and stabilize the price volatility that plagues cryptocurrencies and renders them impractical for commerce and payments.
This article was originally published by The Economic Times. Algoworks does not take any credit and is not responsible for the information shared in the article.