High profile members of Facebook’s Libra Association have withdrawn their support for the new cryptocurrency.
Visa, Mastercard, eBay, and Stripe pulled out as founding members of the Libra Association mere days before the group was set to hold its first official meeting.
Online travel company Booking Holdings also jumped ship at the final hour.
The organisations have joined MercadoLibre and PayPal in stepping away from the controversial cryptocurrency.
This latest round of withdrawals came less than a week after two US Senators sent letters to the CEOs of Stripe, Mastercard, and Visa warning them of the risk involved in the Libra project.
Senators Brian Schatz and Sherrod Brown advised the financial services CEOs that involvement with Libra could inadvertently link their organisations with criminal and terrorist activities.
“Facebook is currently struggling to tackle massive issues, such as privacy violations, disinformation, election interference, discrimination, and fraud, and it has not demonstrated an ability to bring those failures under control,” the letters said.
“You should be concerned that any weaknesses in Facebook’s risk management systems will become weaknesses in your systems that you might not be able to effectively mitigate.”
When announced in June, Facebook said that the Libra cryptocurrency – a stablecoin backed by a reserve of low-volatility assets – would be governed by an association consisting of its founding members.
The first meeting of the Libra Association took place on Monday in Geneva to officially establish its members, board and charter.
Vodafone, Uber, Coinbase, and Spotify were among the 21 initial signatories.
Co-creator of Libra, David Marcus, pronounced the meeting a success, but Libra still has a lot of minds to change before its intended launch in the first half of next year.
2/ We're now 1 out of 21 official members (and many more to come), and I'm honored to have been voted in alongside four awesome board members: @katie_haun (@a16z), @wences (@xapo), Patrick Ellis (PayU), and Matthew Davie (@Kiva). Onward!— David Marcus (@davidmarcus) October 14, 2019
A G7 taskforce has produced a draft report into digital currencies and warns that Libra may not get regulatory approval, according to the BBC who has seen the draft.
Senior officials from central banks along with the International Monetary Fund, and the Financial Stability Board have helped produce the report that will be published later this week.
“The G7 believe that no stablecoin project should begin operation until the legal, regulatory and oversight challenges and risks are adequately addressed,” the report apparently said.
“Addressing such risks is not necessarily a guarantee of regulatory approval for a stablecoin arrangement.”
Without regulatory approval, Libra may not legally be allowed to operate within certain jurisdictions such as France and Germany with both nations issuing a joint statement showing their opposition to Libra last month.
“France and Germany reaffirm their willingness to tackle the challenges raised by cryptocurrency and so-called stable coin projects: financial security, investor protection, prevention of money laundering and terrorism financing, data protection and financial and monetary sovereignty,” the statement said.
“France and Germany consider that the Libra project, as set out in Facebook’s blueprint, fails to convince that those risks will be properly addressed.”