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Three of the founding members of Libra Association consider backing out: Report

Fri, 23 Aug 2019, 10:49 am UTC

Some of the early backers of Facebook’s ambitious cryptocurrency project are considering backing out from the initiative, according to the Financial Times.

The report comes amid growing regulatory scrutiny on Libra from authorities all over the world – the most recent being the European Commission reportedly sending out questionnaires to entities associated with the project.

Announced in June this year, Libra is the social network giant’s proposed payment system. It is backed by a reserve of “real assets,” such as a basket of bank deposits and short-term government securities, designed to give it intrinsic value.

Libra will be governed by the Libra Association, an independent, not-for-profit organization headquartered in Geneva. At the time of its official announcement, Facebook had revealed 28 founding members of the association, including Mastercard, PayPal, Visa, eBay, Coinbase, Xapo, and many others, who made a non-binding pledge to invest at least $10 million in the project.

As per the report, at least three of the founding members are now considering ending their association with Libra. The members, however, have not been named.

Two of the members told FT that they were mulling to sever ties due to heightened regulatory pressure on the project. Another member reportedly said that they were concerned about publicly supporting the project as it could attract unnecessary attention from authorities on their businesses.

“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.

In addition, sources close to the project told FT that the lack of public support from the founding members has somewhat infuriated Facebook.

“Facebook is tired of being the only people putting their neck out,” said one of the Libra backers.

Two of the founding members said that they were holding talks about what should be their next steps. One of the companies said some of these discussions should have taken place before the launch to better understand and tackle the regulatory response.

Facebook, however, has been repeatedly emphasizing that Libra would not be launched until all regulatory concerns are fully addressed. The company has even said that the project might not even have the chance of seeing the light of the day as it continues to face regulatory scrutiny.

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