Four payments companies that have joined Facebook Inc as founding members of the Libra Association are wavering over whether to officially sign on to the cryptocurrency project, according to people familiar with the matter.
Visa Inc, Mastercard Inc, PayPal Holdings Inc and Stripe Inc are undecided about formally signing onto Libra’s organizing charter because they are concerned about maintaining positive relationships with regulators who have reservations about the project, the people said.
Executives at the payments companies believe Facebook oversold the extent to which regulators were comfortable with the project and are concerned about the perception the social network has not behaved responsibly in other areas — such as how it has handled user data and privacy, the people said.
The Libra Association is asking the 28 founding members to reaffirm their commitment to the cryptocurrency project later this month, according to three people familiar with the matter.
Before Libra was unveiled, the companies signed non-binding letters of intent to explore joining the association.
David Marcus, the Facebook executive leading the Libra effort, yesterday said on Twitter that the “[first] wave of Libra Association members will be formalized in the weeks to come.”
Marcus said he was unaware of any Libra partners who might abstain from officially joining the organization, but building a new global currency is “hard and requires courage.”
“I can tell you that we’re very calmly and confidently working through the legitimate concerns that Libra has raised by bringing conversations about the value of digital currencies to the forefront,” Marcus added.
Companies that officially join the charter will not be obligated to immediately contribute an initial US$10 million required to invest in the project, two of the people said.
The option to delay the payment reflects the association’s strategy to move the Libra project forward in baby steps, the people said.
That would give members more time to work out how their participation might affect the rest of their companies’ operations and regulatory obligations, they said.
The signing of the charter could take place as soon as Oct. 14, three people said, and is likely to happen in Switzerland, where the non-profit organization charged with managing the Libra digital currency reserve and global payments network would be headquartered.
“Nothing has changed with our involvement with Libra since we came on to participate,” a Stripe spokesman said. “We agreed to work on the charter with these other participants. We continue to work on the charter. We’re still actively involved.”
He declined to comment specifically on whether Stripe has hesitations about signing the charter.
Spokespeople for Facebook, Visa, Mastercard, PayPal and the Libra Association declined to comment.
Some European finance ministers have threatened to ban Libra in their respective countries and the EU’s antitrust chief has said she has taken the unusual step of scrutinizing Libra because of the risk it could lead to the creation of a new, entirely separate economy.
Opponents of the plan have said that Libra, which would be backed by a pool of traditional currencies, could undercut countries’ monetary policies or be used for nefarious purposes.
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