A report by the Wall Street Journal finds major Libra partners, such as Visa and Mastercard, are reconsidering their involvement considering the regulatory uncertainty and scrutiny.
Since Facebook currently had 2.4 billion users, many companies consider this fact paramount in their predictions that Libra is the next great investment. At the same time, however, government and banking officials have been quite critical of the project.
For instance, U.S. Federal Reserve Chairman Jerome Powell informed Congress that he had “serious concerns” about Libra.
Putting aside personal feelings considering Libra, it is clear that many traditional entities have a serious problem with the potential cryptocurrency.
The WSJ report finds that “The Treasury Department sent letters to companies including Visa, Mastercard, PayPal Holdings Inc., and Stripe Inc. asking for a complete overview of their money-laundering compliance programs and how Libra will fit into them.”
This, in and of itself, can strike fear in the heart of those considering involvement. A letter from the Treasury Department can certainly influence a company’s decision going forward. Additionally, it has lead to pressure on the Libra Association on just how it will handle the concerns raised by the government, such as preventing money laundering.
Visa made a statement through their Chief Executive Al Kelly: “It’s important to understand the facts here and not any of us get out ahead of ourselves… No one has yet officially joined.”
There is clearly uncertainty going forward with Libra. It is also clear that the government is doing what it can to strike uncertainty and doubt into the hearts of potential Libra backers. Ultimately, this is partially the result of centralization – we see how other centralized entities, such as the government, can take control/influence projects that are not decentralized.
Compared to truly decentralized blockchains, such as bitcoin, there is no centralized entity that can be controlled by any other centralized entity. There is no individual that a government could threaten in order to manipulate the market. It will be interesting to see who stays and who goes considering Libra.