Facebook’s ambitious Libra cryptocurrency announced the creation of its 21-member association Tuesday. The announcement was made in the wake of reports earlier this week that multiple prominent corporations retracted their membership in the oversight association. eBay, Booking Holdings, Visa, Mastercard, Stripe, and Latin American payment processor Mercado Pago all withdrew within the last week, joining Paypal which exited October 4.
Despite these disruptions, the Libra Association held its inaugural meeting Tuesday in Geneva, where it announced its 21 initial members. The backers include Uber, Lyft, Spotify, cryptocurrency and blockhain companies, venture capital firms, UK retailer Farfetch, and telecommunications providers Illiad and Vodafone. The recent departures leave Libra without a payment processor in its association.
Libra has also announced its board, comprised of Matthew Davie of Kiva Microfunds, Patrick Ellis of PayU, Kaite Haun of Andressen Horowitz, Wences Casares of Xapo Holdings, and David Marcus, who initiated the Libra project while heading Facebook Messenger.
According to its website, Libra has set out to build a more stable and sustainable cryptocurrency, one that is built in collaboration with current financial institutions and regulators. Unlike currently popular cryptocurrencies like Bitcoin, Libra will be fully backed by currency and securities in a bid to rein in volatility that has plagued other cryptocurrencies. Libra will also not use the traditional ‘mining’ model, which generates units of currency in exchange for processing power. Only Libra members will be able to process transactions with the currency.
Libra is the first cryptocurrency offering proposed by a major technology company and represents a bold entry into a new market for Facebook. However, Libra immediately encountered widespread regulatory scrutiny, bolstered by Facebook’s recent controversies in the privacy, cybersecurity and antitrust spaces. Rep. Maxine Waters (D-CA), House Financial Services Committee chair, asked Facebook to halt development on Libra in a statement. “With the announcement that it plans to create a cryptocurrency, Facebook is continuing its unchecked expansion and extending its reach into the lives of its users.” Waters added that “[r]egulators should see this as a wake-up call to get serious about the privacy and national security concerns, cybersecurity risks, and trading risks that are posed by cryptocurrencies.”
President Trump also weighed in, tweeting that “If Facebook and other companies want to become a bank, they must seek a new Banking Charter and become subject to all Banking Regulations.”
Libra is set for a launch in 2020. The Association’s statement is bullish on the prospect of attracting additional membership, noting that “over 1,500” entities have expressed interest in joining. Additional regulatory hearings, both in the United States and abroad, are expected ahead of Libra’s launch.