Facebook’s Libra cryptocurrency plan just got formalised, but a quarter of its backers have now drop

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Facebook took a major step on Monday towards formalizing its planned cryptocurrency Libra, establishing a council of 21 firms committed to launching and overseeing the currency — a move overshadowed by more than half a dozen of its initial partners dropping out.

David Marcus, CEO of Facebook's Calibra digital wallet service, arrives for a House Financial Services Committee hearing on Facebook's proposed cryptocurrency on Capitol Hill in Washington, Wednesday, July 17, 2019. AP Photo/Andrew Harnik

David Marcus, CEO of Facebook's Calibra digital wallet service, arrives for a House Financial Services Committee hearing on Facebook's proposed cryptocurrency on Capitol Hill in Washington, Wednesday, July 17, 2019. AP Photo/Andrew Harnik

The changes mean that Libra now has a more formal, layered governance structure that Facebook can point to if quizzed about the currency by regulators. It also means that the Silicon Valley social networking giant won't be the sole "face" of Libra — it is, theoretically, just one seat at the table.

The Libra Association, the collective of firms interested in building and supporting the digital currency, now officially has 21 members, including Facebook, Spotify, venture capital firm Andreessen Horowitz, Lyft, and Uber. On Monday, those 21 firms signed a charter and assigned a representative to the association's governing council, called the Libra Association Council. That council also voted in a board of five representatives, including Facebook's Libra mastermind David Marcus.

The announcement should be a vote of confidence in Libra, but it came amid a slew of negative headlines for the project, with a quarter of the Libra Association's planned members dropping out, and regulators and lawmakers closely scrutinising the project.

There were originally 28 members of the association, but over the last few weeks seven backers — including Visa, Mastercard, Stripe, and Booking Holdings — withdrew their support for the cryptocurrency.

It also looks like the cryptocurrency won't necessarily be ready for its intended launch date at the end of 2020.

Dante Disparte, Libra's newly appointed deputy chairman, told The Financial Times on Monday that regulatory hurdles would probably delay the launch. "We need to make sure we pursue the right licensing approvals, and that is the part that may not be ready in time," he said.

David Marcus, the Facebook exec overseeing the launch, put a brave face on the setbacks.

"Awesome day today at our inaugural Libra Association member council!" he wrote on Twitter. "It was energizing to see reps from many different industries, and interests come together with one mission at heart, improve access and lower costs to digital money and financial services for everyone."

Earlier in the week, Marcus had tried to downplay the exit of Visa, Mastercard, and Libra's other partners.

He wrote on Friday: "I would caution against reading the fate of Libra into this update. Of course, it's not great news in the short term, but in a way it's liberating. Stay tuned for more very soon. Change of this magnitude is hard. You know you're on to something when so much pressure builds up."

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