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For anyone following the troubled attempts by Facebook to create a new global digital currency Friday the 11th of October was a pretty dramatic day. Within the space of about three hours, five different companies all announced they no longer wanted to be a part of Project Libra. We at the FT had been hearing rumours about a possible mass defection from the scheme for quite a while. From the moment, in fact, when David Marcus, the co-creator of this project, testified here in Washington DC in front of Congress, and was given something of a mauling.
It was clear something was happening last Friday when I received a text from a source telling me that MasterCard was about to drop out, at the same time that my colleague Hannah Murphy in San Francisco was hearing the same thing about eBay. And within hours, confirmations came tumbling out, not just from MasterCard and eBay, but also from Visa, from Stripe, and from Mercado Pago.
So what was it that brought these companies, finally, to decide they no longer wanted to be involved? Well my sources tell me it was a letter, signed by two democratic senators, Brian Schatz and Sherrod Brown, in which they warned the payments companies that if they proceeded with the project, their existing businesses would come under greater regulatory scrutiny.
The companies decided they simply couldn't afford that risk, and so they backed out.
So can Facebook proceed with this project? Well technically, it can. And Mark Zuckerberg says the will is still there. He is testifying in front of Congress next week about it, in fact. But with mistrust of Facebook being one of the few things that still unites Democrats and Republicans it would be a brave regulator who decides to give this project the green light.