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When Facebook announced its ambitious new plans to create a cryptocurrency earlier this year it did so with a lot of fanfare and not much detail. The scheme, we were told, could make it nearly free and almost instantaneous to transfer money anywhere around the world. It could even, we were told, bring millions of people without bank accounts into the formal economy for the first time. But at the same time Facebook told us they had not yet secured the necessary regulatory approvals for the project. And nor had they finalised who their other backers would be.
Well, since then, regulator after regulator has come forward to voice concerns about the scheme. Many are worried that it could allow criminals to use the platform to launder money. And some are worried that it could threaten the global dominance of the dollar. That could undermine US monetary and foreign policy.
This regulatory scrutiny has become so intense that some of Project Libra's prospective backers are beginning to get nervous, especially those that already have payments businesses such as Visa, MasterCard, Stripe, and PayPal. PayPal, in fact, did not attend a meeting here in DC to discuss the communication strategy behind Project Libra. And we've been told by people close to the company that it is thinking of pulling out altogether.
As I speak, we are days away from finding out what the final list of Project Libra's backers will be. At that point we will know whether PayPal has joined or not, whether others have joined or not, and whether the momentum behind the entire scheme has begun to stall.