MASS EXODUS: LIBRA PULLING PLUG!
First the one, now the others: Facebook’s embattled Libra stablecoin project is in crisis. The dominos have started to fall. Financial backers eBay, Stripe, Visa, and MasterCard have all followed PayPal’s lead in withdrawing their support for Libra.
PayPal and Stripe have both suggested that they’ll be watching Libra’s progress closely and might consider re-joining, but that doesn’t mean much right now.
As an investor, you need to watch companies’ actions, not their words.
I got into Bitcoin very early and I’ve been telling people to focus on the original handful of cryptocurrencies that have been around for a while, especially Bitcoin and Ethereum. Anything’s possible but to be honest, the Libra Project could be dead in the water before it even gets off the ground.
These huge corporations are backing away from Libra at the worst possible time because the inaugural board meeting of Libra backers is almost under way, and now the meeting will be uncomfortably small.
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The remaining attendees of note (assuming they don’t back out at the last minute) include Uber, Coinbase, Spotify, and Vodafone. The rest of them are companies you’ve probably never heard of, and which have a lot less capital and clout than Visa and MasterCard.
The timing of this is also bad for Libra because Mark Zuckerberg will be testifying before Congress amid unrelenting scrutiny of his stablecoin project. Here’s what we know so far:
- The official name of the hearing will be “An Examination of Facebook and Its Impact on the Financial Services and Housing Sectors,” even though everybody knows that it will really be about the Libra Project.
- Zuckerberg will be the sole witness at the hearing.
- It will take place sometime this month.
- We should expect tough questions from Committee Chairwoman Maxine Waters, who had previously requested that Facebook halt the Libra implementation.
This could be the final nail in the coffin for Libra; regulatory entities continue to put unrelenting pressure on digital assets. In another example of this, the SEC now has Telegram in its crosshairs as they’ve halted their $1.7 billion rollout of the GRM token, with the accusation that GRM is an unregistered digital token offering.
The SEC has filed an emergency action and issued a restraining order against Telegram – this is ominous and we can only wonder whether Facebook could be next.
The SEC, the Commodity Futures Trading Commission, and the Financial Crimes Enforcement Network just warned crypto users against using their assets illegally, including for money laundering and terrorism financing.
Policymakers are making it crystal clear that they’re not going to let the crypto community flourish without scrutiny and oversight. As for Libra — if the backers are backing out, it could be for a very good reason.
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This work is based on SEC filings, current events, interviews, corporate press releases and what we’ve learned as financial journalists. It may contain errors and you shouldn’t make any investment decision based solely on what you read here. It’s your money and your responsibility. The information herein is not intended to be personal legal or investment advice and may not be appropriate or applicable for all readers. If personal advice is needed, the services of a qualified legal, investment or tax professional should be sought.