Banking News

Vodafone withdraws from Libra digital currency project

libra

Yesterday Vodafone confirmed it was the latest major corporation to move away from the Libra digital currency project unveiled by Facebook in June last year. With 625 million subscribers, Vodafone is the world’s second-largest telecoms company based on user count.

Several high profile corporates dropped out of Libra before formally signing the Libra Association charter in October. Vodafone is the first that signed the charter but subsequently withdrew. The organizations that dropped out earlier were PayPal, Visa, Mastercard, Stripe, Mercado Pago, and Booking.com.

“We will continue to monitor the development of the Libra Association and do not rule out the possibility of future co-operation,” according to a Vodafone statement.

The telecoms firm said it wanted to focus its efforts on its own inclusive payments business M-Pesa. In 2019, 37 million customers used the M-Pesa service for 11 billion transactions, primarily in Africa. The company expanded the service to India, where Vodafone Idea is the second-largest mobile provider. However, it shut the operation last June.

The regulatory backlash against Libra likely played a role in Vodafone’s decision. Regulators and central banks are concerned about Facebook’s influence and its potential to offer a digital currency to its 2.4 billion users. With numerous other big names involved, it was easier to argue that it wasn’t just Facebook driving the show.

The current Libra board is made up of Calibra/Facebook, Xapo, PayU, Kiva Microfunds, and Andreessen Horowitz.

At R3’s CordaCon in September last year, a show of hands indicated that most believe Libra won’t go live this year but will launch in two to five years. Few believed it would fail to start. However, since September, the response from central banks and regulators has become even chillier.

Meanwhile, Libra is forging ahead with development and recently set up a technical steering committee and incorporated new subsidiaries.

Libra’s website now shows the following remaining members:

Payments: PayU (Naspers’ fintech arm)
Technology and marketplaces: Facebook/Calibra, Farfetch, Lyft, Spotify AB, Uber Technologies, Inc.
Telecommunications: Iliad
Blockchain: Anchorage, Bison Trails, Coinbase, Inc., Xapo Holdings Limited
Venture Capital: Andreessen Horowitz, Breakthrough Initiatives, Ribbit Capital, Thrive Capital, Union Square Ventures
Nonprofit and multilateral organizations, and academic institutions: Creative Destruction Lab, Kiva, Mercy Corps, Women’s World Banking