This past week hasn’t been the best for fans of Facebook’s Libra. Just about a week ago, PayPal withdrew from the association, followed by Visa, Mastercard, and all other U.S. payment processors, just a few days ago. For good measure, e-commerce giant eBay also quit the project.
While it may seem that Libra is going up in smoke, this turn of events might actually be a good thing for the crypto venture. Libra is not the first stablecoin we’ve seen and it won’t be the last.
But what caught policymakers’ attention was the enormous reach of Facebook combined with the initially announced partners to the Libra Association.
As of June 30, Facebook alone has 2.41 billion monthly active users with more than 2.1 billion using one of the company’s apps on a daily basis. The sheer outreach potential of this alliance was something U.S. regulators could not ignore.
Several hearings were held, but none put policymakers’ concerns to rest. Questions about money laundering, ease of use, exclusivity, and Switzerland, all overwhelmed regulators and the Libra Association itself.
With the launch date set somewhere in 2020, the pressure on politicians to research, understand, and make sure the project complies with relevant policies was in excess.
The outrage was instant as talks of the Zuck buck, Libra trying to overthrow banks, and Facebook chasing the goal of controlling the world with their own private currency, were all too common, albeit not very reasonable.
However, the venture did seem overwhelming to policymakers as it looked like something extremely difficult to regulate, seeing the massive organizational involvement, technological solution, and support for the project.
This seeming invulnerability and the convoluted nature of the enterprise were, at least in some part, a cause of the extreme criticism the project started receiving just hours after its announcement. To be exact, criticism started mounting as soon as rumors of the project surfaced. Previous scandals involving Facebook and the privacy of its users didn’t help either.
However, the recent exodus has somewhat destroyed the “out-of-control” image of the Libra Association, making it easier to content with, at least in the eyes of policymakers.
As initial supporters distance themselves from the project, regulators can take a deep breath and examine the situation more calmly, without being pressured by a launch date.
Libra chief David Marcus has committed to adapting Libra to relevant policies before launching, however, the question remains whether current policies will be enough or new ones will have to be crafted, adapting to the uniqueness of Libra.
On October 23, Mark Zuckerberg is set to testify in a congressional hearing titled “An Examination of Facebook and Its Impact on the Financial Services and Housing Sectors”. Whether this hearing will put some concerns to rest is anyone’s guess as there seems to be a disconnect between regulators and the core mission of Libra, that is, judging by the hearings we’ve had so far.
Now that the monster is not so big in the minds of people, perhaps it might receive an objective judgement, spurring a more reasonable and healthy debate around what has become cryptocurrency’s best chance at mainstream adoption.