- Facebook's beleaguered effort to start a worldwide cryptocurrency suffered another blow as Visa, Mastercard, Stripe and eBay withdrew from an alliance of companies that had pledged to help create a rival to bitcoin, per multiple press reports. Their withdrawal follows PayPal's exit earlier last week from the Libra Association, which has faced a more uncertain future amid mounting opposition from lawmakers, regulators and central bank officials.
- Facebook CEO Mark Zuckerberg will face questions from lawmakers about Libra when he appears in a one-man hearing titled "An Examination of Facebook and Its Impact on the Financial Services and Housing Sectors" before the House Financial Services committee on Oct. 23, per an announcement from Rep. Maxine Waters, chairwoman of the committee.
- The Libra Association's remaining partners were scheduled to meet today in Switzerland to sign on to the project,and to appoint a board of directors. The nonprofit group's website lists Facebook, Uber, Lyft, Spotify and Vodafone among its partners.
Losing the support of eBay, MasterCard, PayPal, Stripe and Visa may not be the death knell for Facebook's cryptocurrency ambitions, but their withdrawal from the Libra Association removes much of the expertise and reach of heavyweight payment companies that process billions of transactions.
Facebook has the financial firepower to push ahead with Libra, and it may be able lure back payment companies when the legal framework for its cryptocurrency is more established. However, Facebook faces significant regulatory concerns about possible disruptions to the global economy and financial system by creating a currency that would be accessible to billions of people who use the company's social platforms.
For Facebook, the Libra initiative is part of the company's strategy to lessen its dependence on digital advertising, a market whose growth is forecast to steadily decline in the next decade as it matures. The company has made a major push into e-commerce by adding more shopping features to its Facebook, Instagram, Messenger and WhatsApp platforms that have a collective 2.7 billion users worldwide. Facebook's other key initiative is a greater focus on private, encrypted messaging to alleviate concerns about its data-sharing practices.
Zuckerberg's appearance in a congressional hearing next week may help to quell lawmaker concerns about its plans. It will mark the second time that a Facebook executive has been called to Capitol Hill to face questions from members of congress.
David Marcus, who oversees Facebook's digital currency efforts, in July appeared before the Senate Banking Committee and House Financial Services Committee to answer questions about Libra. Many of the questions focused on whether Libra would create a potentially destabilizing parallel financial system that is unregulated and supports illegal transactions among drug dealers, human traffickers, terrorists and tax evaders, CNBC reported.