Vodafone became the latest big tech company to abandon the controversial Libra project, inflicting a fresh blow to the Facebook-led digital currency initiative.
The telecoms group is the eighth backer to pull out of the ambitious project, which has faced intense scrutiny from global regulators and politicians over concerns it could facilitate money laundering and hurt financial stability.
Vodafone said on Tuesday that it had made the decision, first reported by cryptocurrency publication Coindesk, to instead redirect its efforts towards its own mobile money payments service, M-Pesa.
"We have said from the outset that Vodafone's desire is to make a genuine contribution to extending financial inclusion," a Vodafone spokesperson said. "We remain fully committed to that goal and feel that we can make the most contribution by focusing our efforts on M-Pesa. We will continue to monitor the development of the Libra Association and do not rule out the possibility of future co-operation."
Facebook announced plans in June last year to spearhead the launch of a digital currency, dubbed Libra, that it said would enable fast, low-cost international payments online.
The Libra consortium, a 27-strong group made up largely of finance and technology companies, each agreed to contribute US$10 million ($15.1m) to kick-start the initiative and be a part of the board that oversees its development.
However, seven of these initial members — Mastercard, Visa, eBay, Stripe, PayPal, Mercado Pago and Bookings Holdings — quit in October after a regulatory backlash and warnings from some politicians that the project and any companies involved in it would be closely watched.
In mid-October, Facebook's chief executive Mark Zuckerberg faced bruising questioning from Congress over the plans, including monetary stability worries and scepticism over whether users' privacy would be respected.
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Since then, the Libra Association has been working on developing a blueprint for a "Libra 2.0" that addresses US regulators' concerns, according to a person familiar with the project.
Several founding members have told the Financial Times they remain frustrated that Facebook is so closely associated with the project, despite attempts to spin it off as its own independently-governed effort. Facebook is still bankrolling Libra — members are yet to hand over the US$10m they have committed to it — and the association is still hunting for an independent head.
It is also in the process of assessing hundreds of applications from other non-profits and businesses to join the project.
"Although the make-up of the asssociation members may change over time, the design of Libra's governance and technology ensures the Libra payment system will remain resilient," Libra's head of policy and communications, Dante Disparte, said on Tuesday.
- Additional reporting by Nic Fildes
Written by: Hannah Murphy
© Financial Times