Yesterday the Financial Times (FT) reported that Paypal is getting cold feet over Facebook’s Libra blockchain project. There was a Washington meetup for the 28 Libra members, but Paypal was the only one not to show.
Apparently, payments companies are concerned that the regulatory scrutiny that Libra has attracted could spill over into their businesses. None of the Libra members have yet to hand over the $10 million financial commitment, while Facebook’s team continues to develop the software.
In July at the U.S. Senate hearings about Libra, Senator Schatz was one of the first to highlight the reservations of Libra members. “What I’m hearing, and they’re terrified to talk about this publicly, is that members of the consortium actually have lots of questions too, similar to the questions that are being offered on this dais,” said Schatz. “And they have great reservations about moving forward, but they don’t want to be left out because of Facebook’s market power.”
And its Facebook’s two billion-plus users combined with big names like Visa, Mastercard, Paypal and Stripe that is raising concerns about antitrust issues. The European Union’s antitrust regulators are actively exploring the project.
Yesterday Federal Reserve Vice Chair for Supervision Randal K. Quarles was one of the latest to highlight concerns.
“It is Facebook’s proposal for a new stablecoin that significantly increased the public’s attention to stablecoins,” said Quarles, who is also Chair of the Financial Stability Board (FSB). “The introduction of stablecoins, however, brings a potentially new scale and scope that the financial regulatory community must carefully consider.”
“Although there is a small risk to financial stability today, there is no doubt the potential scale of stablecoins and other crypto-assets yet to emerge may pose regulatory challenges.”
The Financial Stability Board is part of the Bank of International Settlements (BIS). Another BIS group is the Committee on Payments and Market Infrastructure. Two weeks ago its leader Benoît Coeuré, discussed “whether Libra, or similar global ‘stablecoin’ initiatives, may be a contender for the Iron Throne of the dollar.”