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February 4, 2020

Mastercard quit Facebook’s Libra cryptocurrency project over regulatory concerns

Payments giant Mastercard quit Facebook-led Libra stablecoin project over regulatory and viability concerns, the company’s CEO and president Ajay Banga said in an interview to the Financial Times.

Libra is described by Facebook as a “global currency and financial infrastructure”. It will be powered by a Facebook-created version of blockchain.

Banga told the publication that he likes the idea of a global currency and joined the association of companies backing Libra. However, concerns over compliance and the business model led him to withdraw.

Financial inclusion, he said, would mean a government is able to pay citizens in a certain currency, which they must be able to understand how to use and must be usable in day-to-day transactions for items like food.

“If you get paid in Libra [coin] . . . which go into Calibras, which go back into pounds to buy rice, I don’t understand how that works,” he said.

“It went from this altruistic idea into their own wallet. I’m like: ‘this doesn’t sound right,” Banga added.

Banga pointed out that there were no obvious means for the Libra Association to become profitable or make money from its users.

“When you don’t understand how money gets made, it gets made in ways you don’t like,” he said.

Mastercard and its arch-rival Visa pulled out of the Libra project in October last year.

Mastercard did not comment at the time why it had exited the project, however, a Visa representative said the company had quit as the project had not been able to “satisfy all requisite regulatory expectations.”

Prior to them, PayPal also withdrew from the Facebook-backed cryptocurrency initiative.

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