Facebooks’ Libra cryptocurrency project has been losing high-profile support for months, but the loss of Vodafone may be its most critical.
Vodafone has joined a
Most of the departures have not given a reason, generally leaving the impression they didn’t want to shoulder
"We remain fully committed to that goal and feel that we can make the most contribution by focusing our efforts on MPesa," the statement said.
Vodafone backs
MPesa has operated primarily through telco rails, by linking top ups and mobile bills to P2P transfers and other financial services. But as it’s grown, MPesa has added scale and major partners in multiple markets. Beyond some early pushback from local banks and politicians in Africa more than a decade ago, MPesa doesn’t draw as much controversy as Facebook.
Vodafone leaves open the possibility it will cooperate with Libra in the future, but it would not comment for this story beyond its PR statement.
Facebook’s primary argument in getting regulators and institutional partners on board with
The role of Libra’s partners has not been defined in detail, but the most commonly understood model was the partners would manage different nodes in the Libra blockchain. Expertise is also expected to play a role — for example, the card brands would have lent compliance or payment network input.
Vodafone’s role could have involved mobile or financial inclusion, and its nod in favor of MPesa weakens Libra’s argument that it can deliver on improving access to the financial system.
"[Facebook’s] looking to enter cryptocurrency was Facebook’s way of monetizing its user base and reacting to a competitive financial process that had become available through similar services offered by platforms like WeChat and Line,” said Anurag Lal, CEO of Infinite Convergence, a technology company that supports messaging platforms, among other services. Lal contends Facebook’s plans were never about creating financial inclusion.
Given Facebook’s existing baggage with regulators over issues such as privacy and security, financial inclusion was always going to be a tough sell.
“It has to have a level of credibility and trust and must be accountable and regulated. Facebook has always lacked accountability and this level of mistrust has followed suit when it comes to Libra,” Lal said, adding Vodafone’s not immune to the same worries that have plagued Libra’s other partners. “It’s likely that Vodafone was concerned about the negativity that surrounds Facebook and Libra and by removing themselves from the Libra Association, they are also removing themselves from the risk of any negative repercussions.”
"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," said Dante Disparte, head of policy and communications at the Libra Association, in an email.
“The loss of Vodafone, as well as seven other marquis members of the Libra Association, is a bit of a black eye for the project. It’s hard to deny that,” said Mike Minihan, a partner and tax specialist at BX3 Capital, an advisory firm. “While it may feel like Facebook is rearranging deck chairs on the Titanic at this point, I suspect that is not really the case.”
With a long waiting list of other potential companies from which to choose for the Association, there is still plenty of runway left for the project, according to Minihan. “If anything, the migration of some former members to other payment alternative projects lends credence to the idea that currency alternatives are still a good idea, and the segment is still ripe for disruption.”
