Down seven association members and facing increased scrutiny from government officials, the destiny for Facebook’s cryptocurrency project, called Libra, seems uncertain. Notably, Facebook CEO Mark Zuckerberg is set to testify before Congress next week, on the 23rd of October. This seems to be the pivotal make-or-break moment for this project as a poor performance by Zuckerberg could force this cryptos project into a nosedive.
The Libra Association initially consisted of 28 members and is now down to 21. These former members are Visa, Mastercard, Stripe, eBay, Mercado Pago, PayPal, and Booking.
The decreasing number of associate members poses two issues – the increasing centralization of Libra and the need to replace former members with new members of a comparable reputation.
Each member of the Libra Association is a node that validates transactions; therefore fewer nodes means a more centralized platform. As well, if one’s initial inclination was to trust Libra considering the big names initially backing it, this crowd will wear out; especially if more companies continue to drop off and are not being replaced.
Going solo, Zuckerberg is set to face the House Financial Services Committee as the sole witness. One of the greater reasons for why these companies have dropped out has been threats by government officials.
U.S. Senators Sherrod Brown (D-OH) and Brian Schatz (D-HI), for example, sent a letter to Visa, Mastercard, and Stripe urging them to “reconsider their involvement with the Libra cryptocurrency project” and Yves Mersch of the Central Bank of Europe labeled Libra as being “cartel-like.”
Therefore, in order to quell the fears of the remaining associates (or potential associates watching from the sidelines), a good performance by Zuckerberg seems a must.
The lobbyists for Facebook’s Libra “have emphasized to congressional staffers a willingness to work with U.S. authorities,” as reported by the Wall Street Journal. Unless running contrary to his own lobbyists, this is an indication of the strategy Zuckerberg has going in – to sell to lawmakers and other governmental agencies watching that they will have a good enough seat at the table. Good government relations for Libra, at this point, appears necessary for the project to stay afloat.
One of the difficult jobs for Zuckerberg and his team will be crafting responses that appease not only to government officials and the remaining associate companies but also to the various demographic groups that they are targeting Libra with.
The remaining members of the Libra Association are: Woman’s World Banking, Kiva, Andreessen Horowitz, Farfetch, Iliad, Uber, PayU, Breakthrough Initiatives, Creative Destruction Lab, BisonTrails, Calibra, Facebook, Xapo, Anchorage, Spotify, Coinbase, Lyft, Thrive Capital, Ribbit Capital, Union Square Ventures, Vodafone, and Mercy Corps.
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