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Facebook's Libra currency battered by defections, pushback

SeattlePI.com Saturday, 12 October 2019 ()
Facebook faces a rough road ahead with Libra, but defections by high-profile partners are still unlikely to spell the end for the digital currency.

On Friday, Visa and MasterCard announced their departures from the Libra project, as did e-commerce giant eBay and payments startup Stripe. Last week, PayPal became the first major company to drop out of Libra. The exodus comes amid growing — not to mention stronger-than-anticipated — regulatory pushback against Libra in the U.S. and elsewhere.

"It's a big setback for them but it's not the end," said Gartner analyst Avivah Litan.

Facebook CEO Mark Zuckerberg will appear before Congress later this month to talk about the company's plans for Libra. Rep. Maxine Waters, the California Democrat who heads the House Financial Services Committee where Zuckerberg will testify on Oct. 23, called Libra "a new Swiss-based financial system" that potentially is too big to fail and could require a taxpayer bailout.

Libra's supporters say it could open online purchasing to millions of people who do not have access to bank accounts and could reduce the cost of sending money across borders. It's easy to see how attractive an alternative like Libra could be to people in countries beset with hyperinflation, such as Venezuela and Zimbabwe .

But Facebook already faces scrutiny over its poor record on privacy and its dominance in social media, messaging and related businesses. Will people trust it to create a new, global currency? Libra also poses new questions for the social network: Given that cryptocurrency is lightly regulated now, if at all, how will financial regulators oversee Facebook's plan? And just how much more personal data will this give the social media giant, anyway?

Litan said Facebook can still easily launch Libra in countries with no pushback, of which there are plenty....
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News video: Facebook presses on with e-coin despite defections

Facebook presses on with e-coin despite defections 01:06

Facebook is pressing ahead with its Libra e-currency despite losing another backer. Julian Satterthwaite reports.

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