British telecoms company, Vodafone has become the latest company to quit Facebook’s Libra Association. This makes it the first non-American company to leave the Facebook-led global digital cryptocurrency initiative.
The company claims to be pulling out of the partnership in order to focus its resources on its own digital payment systems. One of such payments is M-Pesa which is currently present in 6 African countries.
“We have said from the outset that Vodafone’s desire is to make a genuine contribution to extending financial inclusion. We remain fully committed to that goal.”Spokesman of Vodafone
But could there be more to Vodafone’s withdrawal than meets the eye?
At the onset, the Libra Association was a 28 member strong organisation tasked with creating a cryptocurrency which can be used to perform transactions globally. The crypto was expected to run on stablecoins using Calibra, a wallet that makes it possible to buy Libra using local currency.
Last year however, 7 American companies including payments giants, Paypal, Mastercard and Visa pulled out of the libra association. Their withdrawal was largely due to increased concerns over regulatory and compliance issues in the US.
Visa and Matercard were are the forefront of providing solutions to compliance issues that will affect the Libra. However, both companies have since absconded the association, leaving them without a solution and presumably with the fearful notion that there’s probably never going to be one.
Vodafone walks away
As it stands, most major US payment processor have exited the association, largely because the specific regulatory requirements allowing them operate in the US can be breached with continued association with Libra.
Vodafone however doesn’t seem to be walking away for the same reason. While we can’t rule out its association with Facebook Libra posing the same regulatory issues for the company back home in the UK, the company insists its exit is more about improving its own services.
Speaking on the severance, head of policy and communication for Libra, Dante Disparte maintained that Libra remains formidable as its governance and technology makes the crypto payment system resilient.
“Vodafone is no longer a member of the Libra Association. Although the makeup of the Association members may change over time, the design of Libra’s governance and technology ensures the Libra payment system will remain resilient. The Association is continuing the work to achieve a safe, transparent, and consumer-friendly implementation of the Libra payment system.”Dante Disparte, head of policy and communication for Libra
Vodafone becomes the eighth company to leave the Libra association, bringing the number of the founding company left to 20. However, Libra clearly intends to admit new members into the Association in 2020. They also disclosed that the current wait list of companies wishing to join is more than 1,500 long.
Last week, Libra inaugurated its technical steering committee to oversee further development of its roadmap. It is however unlikely that the Libra will still launch this year as earlier planned. Facebook CEO, Mark Zuckerberg admitted that much last year, stating that regulatory concerns might push back the date.
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