Facebook’s Libra Coalition Craters, as Visa, Mastercard, eBay, and Stripe Exit the Crypto Partnership

11.10.2019 23:56

Fortune.com

The social network's digital currency dreams might be crumbling.

Facebook’s ambitious plan to create a digital money consortium called project Libra took another major hit on Friday as Visa, Mastercard, eBay, and Stripe dropped out.

The departure of four of the biggest “founding members” comes on the heels of PayPal’s decision to bail out last week.

The departures may pose an existential threat to Libra, which Facebook has touted as a federation of companies that would collectively manage a new cryptocurrency pegged to a basket of fiat currencies, including the U.S. dollar and the euro.

As major companies pull out of the project, it will become harder for Facebook to frame Libra as a broad-based federation, as opposed to a Facebook initiative. While Libra still counts more than 20 other partners— including Uber, Lyft, Spotify, and Coinbase—some of them have ties to Facebook through their boards or investors.

The departures come at an especially inopportune time given that Facebook CEO Mark Zuckerberg is slated to testify about the project before Congress about Libra later this month.

The high-profile exits also come days before a deadline when Project Libra are slated to meet and sign a formal charter to govern the operations of the planned cryptocurrency.

Facebook responded to the departures with a statement.

“We appreciate their support for the goals and mission of the Libra project,” said a Libra spokesperson. “Although the makeup of the Association members may grow and change over time, the design principle of Libra’s governance and technology, along with the open nature of this project ensures the Libra payment network will remain resilient.”

The Facebook comment came after the departing Libra members put out statements of their own to explain their exits.

“Visa has decided not to join the Libra Association at this time,” a Visa spokesperson tells Fortune. “We will continue to evaluate and our ultimate decision will be determined by a number of factors, including the Association’s ability to fully satisfy all requisite regulatory expectations.” Visa says its continued interest in Libra stems from its belief that well-regulated blockchain-based networks could extend the value of secure digital payments to a greater number of people and places, particularly in emerging markets.

“We highly respect the vision of the Libra Association; however, eBay has made the decision to not move forward as a founding member,” an eBay spokesperson said in a statement to the Financial Times, which first reported the pullout. “At this time, we are focused on rolling out eBay’s managed payments experience for our customers.”

“Stripe is supportive of projects that aim to make online commerce more accessible for people around the world. Libra has this potential,” Stripe said in a statement. “We will follow its progress closely and remain open to working with the Libra Association at a later stage.”

Mastercard also released a statement saying it “has decided it will not become a member of the Libra Association at this time.”

“We remain focused on our strategy and our own significant efforts to enable financial inclusion around the world,” Mastercard’s statement continued. “We believe there are potential benefits in such initiatives and will continue to monitor the Libra effort.”

In an email to Fortune, Lyft reaffirmed its commitment to Libra. Other founding partners, including Uber, Spotify, and Booking did not immediately respond to requests for comment.

This story was updated at 5:45ET to include Facebook’s statement.