October 8, 2019
PayPal just pulled out of Facebook’s cryptocurrency initiative Libra, introduced in June. At the time of release, Facebook partnered with 27 companies, including Mastercard, Uber and Visa, as well as PayPal. Libra is designed to be used internationally within Facebook’s own properties, such as Messenger and WhatsApp. Apple chief executive Tim Cook described Libra as a “blatant power grab,” saying that currencies should be the domain of countries and added that Apple had no plans to launch its own digital currency.
The New York Times reports, “PayPal’s decision is a blow to Facebook and its cryptocurrency ambitions, which are based on the premise that Libra will be controlled not by Facebook but by a broad network of corporate partners.” In June, Facebook head of blockchain technology research David Marcus, who was formerly PayPal president, said, “this is something that could be a profound change for the entire world.”
But, from the outset, President Trump criticized it, and Treasury Secretary Steven Mnuchin said he was “very uncomfortable” with it.
After “many other politicians, regulators and central bankers around the world echoed their skepticism,” Marcus was questioned about Libra in Congress, which caused many Libra partners to distance themselves from the project. Some had signed non-binding agreements. Visa chief executive Al Kelly said that his company “will not do anything that we think doesn’t meet our own personal standards, as well as the standards of regulators that we respect around the world.”
Since PayPal dropped out, Marcus has defended Libra on Twitter. According to sources, Facebook chief operating officer Sheryl Sandberg “is expected to appear before the House Financial Services Committee on October 29 to discuss Libra” among other topics.
Facebook chief executive Mark Zuckerberg recently stated he was “committed to making Libra happen … [but] Facebook might not be able to push out the first Libra coins by next year, as the initial plan envisioned.” So far, “1,500 companies and other organizations have expressed an interest in becoming [Libra] partners.”
The Verge reports that Cook stated, “I’m not comfortable with the idea of a private group setting up a competing currency … a private company shouldn’t be looking to gain power this way.” Cook’s comment, it says, is interesting not just because it is “a clear dig at Facebook … but also because it paints Libra in terms few high-profile public figures have dared.”
Facebook has positioned Libra “as a way to build out next-generation blockchain technology and help people in developing countries gain access to banking services,” but if Libra succeeds, Facebook would “remain an influential force in the daily lives of billions of people around the globe.”
Cook’s point of view is similar to many others who have criticized Facebook’s move, including Mark Cuban, who’s dubbed it as “dangerous.” France and Germany have also publicly stated they plan to “block the currency’s rollout in the respective countries” because “monetary power … is inherent to the sovereignty of nations.”
The Ties That Bind Facebook’s Libra, Wired, 10/7/19