META Meta Platforms Inc

By AnnaMaria Andriotis and Peter Rudegeair 

The biggest financial companies that Facebook Inc. recruited to launch a cryptocurrency-based payments network have backed out of the project, threatening to derail an ambitious initiative to remake global finance before it ever gets off the ground.

Visa Inc., Mastercard Inc., Stripe Inc. and eBay Inc. said Friday they were withdrawing from the group of companies that had originally signed on to help launch the libra cryptocurrency, following PayPal Holdings Inc., which dropped out of the Libra Association last week.

The loss of four of the largest payments companies in the world leaves Facebook without the muscle it assembled to launch libra, a digital currency it hoped would make it a player in e-commerce and global money transfers. The project now mostly hinges on smaller payments companies, telecommunications providers, venture-capital firms, e-commerce merchants and nonprofits.

Facebook and the Libra Association didn't immediately respond to requests for comment.

Some of the companies left open the possibility of rejoining the network in the future.

"Our ultimate decision will be determined by a number of factors, including the Association's ability to fully satisfy all requisite regulatory expectations," a Visa spokesperson said in an email. "Visa's continued interest in Libra stems from our belief that well-regulated blockchain-based networks could extend the value of secure digital payments to a greater number of people and places, particularly in emerging and developing markets."

When Facebook unveiled libra this summer, it announced that 27 other companies and organizations had agreed to back it. The idea was that merchants including eBay, Uber Technologies Inc. and Spotify Technologies SA would accept libra as a form of payment, and that companies like Mastercard, PayPal and Stripe and would enable consumers and merchants to convert their national currencies into and out of libra.

Those partners were invited to attend an Oct, 14 meeting in Switzerland to formally sign on to the project, The Wall Street Journal previously reported.

The loss of Visa and Mastercard is a significant setback for libra. The credit and debit cards that run over their networks could have been an easy way for consumers to buy libra coins to use them for purchases. If those payment methods are no longer supported, that limits the options available to turn their funds into cryptocurrency.

Lawmakers and regulators were alarmed when libra was announced, criticizing Facebook for not providing sufficient details about how its backers would ensure it couldn't be used to launder money and channel funds to terrorists. More recently, government officials have pressed other companies in the Libra Association for answers to those questions.

This summer, the U.S. Treasury Department sent letters to Mastercard, PayPal, Stripe and Visa asking for a complete overview of their compliance programs and how libra would fit into them, the Journal reported. Earlier this week, two U.S. senators wrote to the CEOs of three of those companies to voice their concerns about libra.

"If you take this on, you can expect a high level of scrutiny from regulators not only on Libra-related payment activities, but on all payment activities," the senators wrote.

Facebook Chief Executive Mark Zuckerberg agreed to appear before Congress later this month to answer lawmakers' questions about how libra would comply with financial regulations.

--Liz Hoffman contributed to this article.

Write to AnnaMaria Andriotis at annamaria.andriotis@wsj.com and Peter Rudegeair at Peter.Rudegeair@wsj.com

(END) Dow Jones Newswires

October 11, 2019 17:21 ET (21:21 GMT)

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