During a recent Bloomberg interview, Ari Sarker, Co President at MasterCard Asia Pacific was asked about Libra and its recent decision to pull out of the project.
Libra is a global cryptocurrency and financial infrastructure. A digital asset built by Facebook is powered by a new Facebook-created blockchain. The name comes from the basic Roman measurement of weight which is quite fitting for the purpose of it.
Saker pointed out that they are partnered with multiple platforms and companies that operate using blockchain, so Mastercard is supportive of the use of blockchain and is more than eager to cooperate with these companies.
What Mastercard found issue within Libra wasn’t its purpose necessarily, but rather the conflict when it came to regulations and what Mastercard was bringing to the table. MasterCard works with Proof-of-provenance, which is a protocol developed by Digix to track the movement of physical assets through the change of hands in a cryptographically secure manner.
The company also works with business-to-business transactions. So pulling back from Libra was not so much about these services in particular but more so because in the end, Mastercard is a regulated entity. The company works with a number of markets with supervision by Central Bank regulators.
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According to Mastercards co-president, the partnership from the beginning entailed recognizing these regulatory practices and a commitment from the company’s part to bring this aspect into the collaboration. Mastercard had to stay committed to those regulatory frameworks but apparently, Libra didn’t allow much room for that.
Mastercard wasn’t the only one leaving Libra behind for now. Visa also decided to stay on the sidelines leaving Facebook without any support from the major global payment platforms and creating even more challenges that the cryptocurrency was already facing from the government and the court.
Libra has stated that its goal is to serve as a solid foundation for financial services, including a new global currency, which could meet the daily financial needs of billions of people.
But the continuous questions around Facebook’s questionable ethics makes it hard to trust the company with a global currency. Mark Zuckerberg, the CEO of Facebook was answering the questions from lawmakers about Libra for roughly 6 hours but still ended up not getting the support for the project since a lot of lawmakers found it hard to find a purpose for Facebook’s new initiative.