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Contxto – It appears as though Facebook is having some difficulties with its anticipated Libra cryptocurrency. Despite ambitious plans to democratize financial inclusion across the world, it’s not exactly getting the support it needs to gain momentum, especially in Latin America with Mercado Libre’s recent deviation.
Recently, some of Facebook’s key partners reportedly abandoned the crypto coin initiative following widespread international ridicule, Mercado Libre being one of them. Now, this is causing speculation that this project could simply be too good to be true.
Loss of financial partners
When it comes to Mercado Libre’s involvement, the Argentine unicorn was originally a strategic member due to its Mercado Pago platform. When looking at the bigger picture, these events have ultimately left the Libra Association without any payment partners.
This could certainly cause complications in terms of providing financial transactions in the long run. So far, none of the firms have clarified why they divested. We have reached out to Mercado Libre officials and will update accordingly.
Since July of last year, Mercado Libre has shown off its fintech capabilities with its QR code mobile payments. About 250,000 shops in Argentina now accept this versatile payment method that’s reportedly compatible with any virtual wallet.
Following these events, the remaining members consist mostly of VC investor firms as well as telecommunication companies. Let us not also forget about the various tech companies.
“We are focused on moving forward and continuing to build a strong association of some of the world’s leading enterprises, social impact organizations and other stakeholders,” said Dante Disparte, the head of policy and communications for the Libra.
Libra’s Geneva Meeting
Days prior to the Libra Association’s first official board meeting in Geneva, Switzerland on October 14, six out of the 28 partners resigned. Renunciates include high-profile companies such as Paypal, Visa, Mastercard, eBay, Mercado Libre and Stripe. Each was to allegedly invest US$10 million in the Libra coin.
“Visa has decided not to join the Libra Association at this time,” declared a Visa spokesperson. eBay also expressed in a statement that it has “made the decision to not move forward as a founding member. At this time, we are focused on rolling out eBay’s managed payments experience for our customers.”
In spite of the pressure and perceived setbacks, the first official Libra Association meeting took place this past Monday. Its mission is to offer “a simple and global currency and financial infrastructure that empowers billions of people.”
During this time, the group also revealed the new five-member board, including Xapo CEO Wences Casares, Andreessen Horowitz general partner Katie Haun, as well as David Marcus from Facebook. Additionally, PayU general counsel Patrick Ellis and Kiva Chief Strategy Officer Matthew Davie are also members.
A few of the current 21 remaining partners include Uber, Lyft, Vodafone, Coinbase, among other companies.
Another aspect of this dilemma is how these withdrawals have seemingly followed increasing governmental pressure. Some claim that a “mass market digital currency” like Libra could destabilize the financial world.
All the while, others believe that the crypto effort could increase the probability of fraud and cyber-threats. Others may think that Facebook is even “expanding their monopoly,” according to U.S. Senator Josh Hawley (R-MO).
Opposition against the Libra also allegedly reached Europe with France and Germany threatening to block it from the EU market.
Even though Zuckerberg set an initial date of 2020 for Libra’s world launch, recent departures combined with legislative challenges may prove otherwise. Due to regulatory and international political issues, Facebook’s founder said the company will take “however long it needs” to deal with the obstacles.