In an odd turn of events, it has been revealed that Facebook and its consortium of 28 partners, which includes Visa, Spotify, Uber, and countless other corporate giants, aren’t even partners yet.
Speaking in the earnings call for the ongoing fiscal quarter, the chief executive of Visa noted that the agreement they signed with Facebook to be included in the promotional materials was not legally binding.
Visa, Uber, Spotify & Co. Aren’t Even Legally Bound to Libra
In response to a question from Bryan Keane of Deutsche Bank, Alfred Kelly Jr., the CEO of Visa, noted that the agreement that his firm signed with Libra is “non-binding”. He goes on to say that if you delve into the nitty-gritty, it’s not even a contract, but rather a “letter of intent”, meaning that ‘no one has yet officially joined”.
David Marcus, the head of Blockchain/Calibra at Facebook, actually addressed this in last week’s fiery Congressional hearings on the matter of Libra and cryptocurrency. The former PayPal president — a part of the fabled “PayPal Mafia” — noted that his team is still working out the contractual details with the association’s to-be members. He then added that the letters allowed for the partners, which also includes PayPal, Mastercard, Booking Holdings, Lyft, and Coinbase, to pull out.
No specific mentions of Libra partners making such moves were mentioned. But, Kelly Jr. made it clear in the aforementioned conference call that Visa isn’t going into this cryptocurrency project willy-nilly, and thus is keeping a close eye on the developments in Congress and with other lawmaking and regulatory agencies to dictate how the payment processor should address Libra.
Not Looking Good
Unfortunately, Libra isn’t in the best place in the eyes of some of the world’s most powerful people. As detailed heavily by Blockonomi, most regulators do not want the cryptocurrency to launch until all the kinks are ironed out.
European Central Bank board member Benoit Coeure, for instance, noted that for something as important as a new payment system that will be accessible by over two billion individuals in most of the world’s countries, everything needs to be “safe, robust, and resilient from day one”.
Also, the American President, Donald Trump, tweeted two weeks back:
Facebook Libra’s “virtual currency” will have little standing or dependability. If Facebook and other companies want to become a bank, they must seek a new Banking Charter and become subject to all Banking Regulations, just like other Banks, both National and International.
What Trump, Coeure, and others are worried about is Libra’s ability to be used in illicit transactions, like money laundering and terrorist financing, and its ability to disrupt Wall Street and the fiat hegemony that governments have.
And not only are regulators displeased, but so are consumers — the people that will be using the end product. Consumer insights provider CivicScience recently conducted a survey comparing Libra and other cryptocurrencies, namely Bitcoin.
Per their poll, which was responded to by around 1,800 Americans adults, a mere 2% of people trust Libra and Facebook’s Calibra wallet more than Bitcoin. In other words, should the cryptocurrency launch, it may not see as much adoption as Facebook is presumably hoping for.
As to why consumers distrust Libra, many mentions of the Cambridge Analytica scandal and similar debacles were mentioned, accentuating that common Joes and Jills still are skeptical of Facebook’s ability to keep data private.
As both a majority of regulators and a majority of potential adopters of Libra are skeptical, it is unclear how Facebook and its partners will be moving ahead from here.