Viewpoint: The Upside to Facebook’s Libra Disaster
By Leonid Bershidsky
It’s just as well that big companies that process and facilitate payments have quit Facebook’s Libra cryptocurrency project, fearing a regulatory backlash. If Facebook really wants to bring financial services to the “unbanked,” it should try doing it on a smaller scale than these companies’ presence promised. And even then, the probability of failure will be high.
It’s clear why PayPal Holdings Inc., Stripe Inc., eBay Inc., MasterCard Inc. and Visa Inc. have decided not to join the Libra Association, which Facebook has been organizing to run the proposed digital currency. They took seriously the recent warning of Senators Brian Schatz of Hawaii and Sherrod Brown of Ohio that because of their membership, they could “expect a high level of scrutiny from regulators not only on Libra-related payment activities, but on all payment activities.” The concern is that a cryptocurrency used in conjunction with encrypted messaging could potentially be used in illegal transactions, and anyone involved in creating such an opportunity would be suspect.