At least three investors in Facebook’s Libra cryptocurrency are considering disassociating with the currency following intense regulatory pushback.
According to a report published in the Financial Times on Friday, some backers are fearful that the spotlight placed on the social media giant’s proposed cryptocurrency will also bring their own separate, independent businesses into disrepute. Two founding partners have allegedly held discussions with regard to what the “right next steps” should be for their investment. “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],” one of the founding partners said.
Libra has come under strong criticism and skepticism from regulators within the European Union and the US Congress, who have questioned how they are meant to trust Facebook (NASDAQ:FB) given its recent history of misuse of user data, which landed the company with a $5 billion USD penalty. So intense has the criticism been that Facebook was forced to issue a statement last month warning investors that the stablecoin may never be released.
Facebook has reportedly pushed back against the doubting investors, which some have dubbed “the crypto mafia,” arguing that it is “tired of being the only people putting their neck out.” 28 companies have come together to establish the Libra Association, which will take over governance of the coin, and includes some very recognizable names such as Mastercard (NYSE:MA), Spotify (NYSE:SPOT), Uber (NYSE:UBER), and PayPal (NASDAQ:PYPL). Each company had to pay $10 million USD in order to participate in the venture. The three aforementioned doubters remain anonymous.
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Regardless of the outcome of this situation, it will be several years before Libra is fully operational. “It will take years to establish the Association’s governance documents and more years to identify the initial payment use cases the platform will support and the regulatory constraints that the platform must address specific to those use cases,” said Tim Sloane, vice president of payments innovation at Maynard.
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