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Libra Continues to Lose Major Supporters. But Is That a Problem?

23 January 2020 12:21, UTC
Libra Continues to Lose Major Supporters. But Is That a Problem?

Libra by Facebook and TON by Telegram are still struggling with regulators for the right to launch and develop. Still, while the result of the struggle look shady, the early supporters of Libra continue to leave the band. It became known, that Vodafone abandoned the project. What would that mean for Libra Association?

Vodafone drops Libra in favor of M-Pesa

Vodafone is the latest large corporation to withdraw from the Libra association. However, it may be the first of the bunch to leave the association due to personal business reasons rather than regulatory fears. It is believed that large companies such as PayPal and Visa withdrew from the consortium due to an unclear regulatory future not only in the United States but the whole world. However, according to recent reports, Vodafone’s withdrawal is mostly tied to a change of business plans in Africa.

M-Pesa, which is one of the, if not the most popular digital payments platform in Africa has been performing extremely well. This is something that Vodafone did not want to risk with a new venture and decided that the funds dedicated to the Libra association are better to be spent on the expansion of M-Pesa to new African nations.

According to reports, Libra and Vodafone parted ways with very little overhead and argument. Much like any other participant of the association, Vodafone had every legal right to withdraw at a moment’s notice. Considering that there are multiple others leaving Libra, the centralized digital currency around Facebook could be a definite reality in the future.

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However, the association is still seeking regulatory clearance and looking for new members as well. And, in fact, it has quite a queue of possible partners.

Who left Libra and why?

When Libra was first announced it tried to band itself as a decentralized consortium with a dozen members or so, hoping to reinvent the digital payment industry. However, thanks to Libra being an offshoot of Facebook, many financial regulators in the world had to somehow research what this new project was going to change. Due to the immense influence that Facebook has over the digital space, it’s commonly believed among most governments that a new currency introduced by a corporation does not give off structural integrity.

Ever since then, Libra has been invited to hearing after hearing trying to explain why it wouldn’t be a problem. Every time congress members and lawmakers were less and less convinced.

Members such as Visa, PayPal, Vodafone, and eBay are all quite successful corporations by themselves and joined the organization simply because it seemed like a good way to bring innovation.

But the regulatory scrutiny is simply too much for a well-established corporation. The loss of face among lawmakers could have cost billions of dollars in the future, compared to unlikely billions of dollars revenue through Libra. In the end, focusing on future profit was enough to convince these large conglomerates to simply bail. And although Vodafone had a good reason in terms of M-Pesa, many experts still believe that Libra’s regulatory issues influenced the decision.

Independent projects?

None of the Libra members have necessarily delved into the blockchain technology too much after quitting the consortium. There were some reports of Visa financing a project and buying a very popular fintech company, but in general, the focus on blockchain is quite minimal. The same goes for PayPal and eBay, indicating that there is still a long way to go for the blockchain industry to convince these corporations that it’s worth the risk.

Image courtesy of Fast Company



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