Libra announces board despite setbacks

LONDON/SAN FRANCISCO- Reuters

Backers of Facebook’s Libra cryptocurrency project pledged to forge ahead after selecting a five-member board on Oct. 14, shrugging off the latest member defection by online travel company Booking Holding earlier in the day.

“It is a correction; it’s not a setback,” said Dante Disparte, head of policy and communications for the Libra Association, whose 21 remaining members held their inaugural meeting in Geneva.

The owner of Priceline, Kayak and Booking.com on Oct. 14 confirmed that it had pulled out of the group, which is trying to bring digital coins into mainstream commerce.

Libra lost its last global payments backers on Oct. 11 when Mastercard Inc and Visa Inc abandoned the Geneva-based Libra Association. EBay Inc, fintech startup Stripe and payments company Mercado Pago also pulled the plug.

The exodus followed warnings from politicians and regulators, from the United States to Europe, that Libra risked upsetting global financial stability, undermining users’ privacy and facilitating money laundering.

The latest withdrawals followed the departure of PayPal Holdings Inc from the Libra Association earlier October 2019. It leaves Facebook without the backing of any major payments firms for the project, due to launch by June 2020.

Disparte acknowledged that the digital currency’s regulatory issues could push back its launch date.

At the meeting in Geneva, members agreed interim articles of association laying out how the organisation will be governed, as required by Swiss law, according to a fact sheet provided by the Libra Association.

Most decisions will require a majority vote of the group’s governing council, although changes to membership or management of the reserve would require a two-third supermajority.

The group elected five people to serve on the board, including Facebook’s David Marcus as well as representatives from PayU, venture firm Andreessen Horowitz, blockchain company Xapo Holdings Limited and non-profit Kiva Microfunds.

The association’s other prominent remaining members include Vodafone Group Plc and ride-hailing firms Uber Technologies Inc and Lyft Inc.

Its only payments firm remaining is Netherlands-based PayU, which according to its website does not operate in the United States, Canada or large swaths of Africa and the Middle East.

The departure of major financial firms means Facebook can no longer count on a global player to help consumers turn their currency into Libra and facilitate transactions. This presents a new stumbling block for Libra’s efforts to convince regulators and politicians about the coin’s safety.

France pledged on September 2019 to block Libra from operating in Europe, while the Bank of England laid out high hurdles it must meet before its launch. U.S. Federal Reserve Chairman Jerome Powell has also suggested the project could not advance before concerns were assuaged.

Libra, announced as Facebook expands into e-commerce, will be backed by a reserve of real-world assets, including bank deposits and short-term government securities, and overseen by the Libra Association.

The structure is intended to foster trust and stabilise the price volatility that plagues cryptocurrencies and renders them impractical for commerce and payments.