When the Libra project was announced on 18 in June, it seemed like another worrying new front in Facebook's mega-expansion. The company already has billions of users earning tens of billions of dollars annually. So Mark probably thought, why not have the currency itself?
Blockchain chief David Marcus has announced his plans for Libra in a detailed paper. The document showed some very strong financial Companies have already signed up to the Libra Association in support of the currency. Facebook's vision for an international currency seemed unstoppable.
But that was then. The first company to drop the Libra project was Paypal, which retired on 4 October. Then, within a few hours of 11 October, Visa, Mastercard, Stripe and Mercado Pago were also withdrawn from the project. Then followed eBay.
This means that every major US financial corporation has abandoned the Libra Association. (The latest financial company is PayU, which has not reported anything after the developments).
Is the fact worrying?
The loss of five serious companies in space two hours may seem like a panicked escape but it's not exactly like that. Let's take a look at the schedule.
On October 14, all founding members will attend the first meeting of the Libra Association in Geneva. There they will separate the roles that the partner companies will play and try to answer all the questions throughgovernments that are not mentioned in the original paper. Ultimately, this will lead to the creation of an official charter, containing the signatures of each member on the new agreement.
This process will include many specific commitments from the companies that make up the Libra Association - so if anyone had doubts, the best time to avoid further commitments is not to sign the new agreement.
But that also means that corporate flight is not as disastrous for the Libra project as it seems. Anyone can sign when they are willing to do so.
This group of companies had a special reason for setting it up. With the exception of eBay, they are all financial companies, which means they have specific regulatory requirements regarding all types of fraud, money laundering and enforcement. Governments began to realize that the Libra project could make it difficult to enforce these requirements - and so the companies involved were exposed.
Such as they said οι γερουσιαστές Schatz και Brown για τις τρεις από τις εταιρείες που αποχώρησαν, "το Facebook φαίνεται να θέλει τα οφέλη από την άσκηση οικονομικών δραστηριοτήτων χωρίς να έχει την ευθύνη του ελέγχου σαν εταιρεία χρηματοπιστωτικών υπηρεσιών".
What does this mean in practice? If the Libra currency made transactions too easy for terrorists and money laundering in general, Visa, Mastercard and others might end up being accused.
This of course is a scary thought for financial firms, which could disrupt their central businesses. Όμως για άλλες εταιρείες της Libra Association, αυτό δεν φαίνεται να είναι problem. Lyft and Uber businesses don't face the same pressure from regulators, so there isn't much of a problem.
Problems with financial companies point to a central problem in the Libra project. Blockchain-backed currencies work best as a stand-alone system, but problems with conventional banking often arise. In the early days of Bitcoin, financial companies were being persecuted for failing to support regulators' claims against money laundering. Recently, US regulators have been able to impose Know Your Customer requirements on all wallet providers.
In the original paper, the Libra project delivered compliance issues to financial companies, hoping that Visa and Mastercard would be able to handle the complex compliance requirements for dollar trading. After Friday's mass flight, companies feared taking responsibility, which is likely to discourage others who were thinking of backing the project.
Whoever takes on this role will have a huge task ahead of him. It should persuade governments around the world to trust Libra at a time when Facebook's public trust is in the tartar.
