A few days before the Libra Association, a group of organizations who are the founding members and each run one of the validator nodes that form the network that operates the Libra Blockchain, was scheduled to meet on 14 October 2019, several of its member companies decided to pull their membership and support for Facebook's proposed digital currency. It all started with PayPal withdrawing from the Libra Association, this was then followed by Visa, Mastercard, eBay, Stripe and Mercado Pago who all announced that they will no longer be participating nor supporting Libra.
What is interesting and probably worrying for Libra is that these withdrawals mean that the Libra Association is now left without any major global payments companies as members, something that could prove to be a hurdle should Libra want to facilitate and process payments from them.
“We remain supportive of Libra’s aspirations and look forward to continued dialogue on ways to work together in the future. Facebook has been a longstanding and valued strategic partner to PayPal, and we will continue to partner with and support Facebook in various capacities," said PayPal in a statement.
These withdrawals didn't just happen in a vacuum as they seem to have been motivated by concerns raised by American policymakers regarding Libra. Specifically, a letter sent to the various Libra Association member organizations CEOs urging them "to proceed with caution until Facebook is able to provide real answers to you,
"We write to share our deep concerns about Facebook's Libra crypto-currency project and the formation of the Libra Association. We are concerned because key questions remain unanswered about the risks the project poses to consumers. regulated financial institutions. and the global financial system. We urge you to carefully consider how your companies will manage these risks before proceeding. given that Facebook has not yet demonstrated to Congress. financial regulators—and perhaps not even to your companies—that it is taking these risks seriously."
Reading the letter, it reads more like a disguised threat to the payments and fintech companies than on which raises concerns. This is further confirmed ny the fact that the US Senate felt the need not only to send it to Facebook, but to each individual company's CEO as if to make them aware that should they get involved with Libra, they too could have concerns raised about their operations.
It remains to be seen what Facebook's response to this will be and whether or not it will hamper the planned 2020 launch of the digital currency.