Mark Zuckerberg’s proverbial crypto bubble could pop before it even gets the chance to take off as 3 companies backing Facebook’s infamous project Libra consider jumping ship. According to a report by Financial Times, some of the original backers of the crypto project are trying to distance themselves from it, while some are considering cutting off their ties with Libra altogether.
It is no secret that extremely strict scrutiny by regulators is weighing the project down since its launch. Libra, even when it was officially unveiled to the world, was not well received by a vast majority of people, including governments. This is now proving to be the biggest obstacle in the project’s path, and could kill the platform’s newest endeavor before it hits the market.
And even if it does make it to the launch, there would be nothing left of the originally envisioned Project Libra by the social media giant.
Ever since the official whitepaper of Libra was released, it touted about how it would be backed by some of the most prominent names that stretched out to different industries including, MasterCard, Visa, Uber, PayPal, Coinbase and Lyft amongst others. Recent reports suggest that of the 28 investment backers, at least 3 are starting to have second thoughts about their alliance with the social media platform.
This new development puts a damper on Facebook’s initial plan regarding their crypto project. The platform’s plans were to release Libra by next year that is 2020, with the hopes of increasing the number of members in the Libra Association from 28 to 100. However considering how some of the most initial backers are shaky with their partnership, that number maybe harder to reach now.
Now comes the question of the day, what is spooking the investors into loosing their faith and confidence in the forthcoming project? The answer is fairly simple; it is regulators all over the world who are increasingly putting the project under microscopic scrutiny.
The reports have not disclosed the identity of the second guessing investors, however they do reveal that first of the two backers of Libra were concerned about the regulatory spotlight that they were attracting because of it.
One of the backers reportedly shared that they are now apprehensive about supporting Facebook’s project because they fear attracting the attention of agencies that oversee their own business. In simpler words they want to put their own interest above their association with Libra.
I think it’s going to be difficult for partners who want to be seen as in compliance [with their own regulators] to be out there supporting [Libra]
Said one of the founding members of the Libra Association while discussing their apprehensions with the news source. Furthermore, the backers are also reportedly worried about what steps should be taken from here on out considering the regulatory torment that has befallen Libra.
Facebook, on the other hand, isn’t entirely oblivious to the current loss of confidence from its backers however, the social media platform as per the reports, is more frustrated than it is afraid of loosing out its backers. It seems that the team behind Libra was hoping that backers would come to the support of project instead of backing out.
In the past couple of months only, Facebook’s Libra has been bombarded with all kinds of negative comments. From the President of the United States Trump, claiming that the platform’s virtual currency will have little or no standing, to Democratic representative Rashida Tlaib, who called out Libra as a potential crypto mafia. It’s crystal clear that people are afraid of the threats that will accompany the project, like money laundering, tax evasion and disruption to wider financial stability.
Deducing from all the bad press that the social media giant is receiving, it’s evident that people are not willing to put their trust in the hands of a platform that has developed a bad reputation for mishandling customer privacy.
Just recently Facebook agreed to pay a record $5 billion to resolve a U.S. investigation into years of privacy violations, a settlement that increases the board of directors’ responsibility for protecting users’ data. Which begs the question; can the platform be trusted with something as sensitive as financial information?