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Mastercard Explains Reasons it Pulled out of Facebook’s Libra Crypto Project

newslogical.com 13 November 2019 01:30, UTC
Reading time: ~3 m

The reason Mastercard dropped out of the Libra project was the discrepancy surrounding the digital coin and some basic norms for regulating payments. This says co-president at Mastercard Asia Pacific Ari Sarker in an interview with Bloomberg.

According to him, Mastercard joined the Libra project, realizing its obligations as a regulated payment system. This status would allow it to set a certain course for some discussions concerning payments.

Sarker said Mastercard stepped back as it perceived that some basic principles of project management were not respected.

At the same time, he emphasizes that Mastercard needs to offer innovative products and services, responding to changes in the world. This must help the company to keep up to date.

In this regard, Mastercard has already introduced the FinTech Express platform, aimed to expand cooperation with fintech companies. The solution is designed to simplify the process of registration and integration of the latter into the global Mastercard network.

Earlier it became known that Mastercard and the R3 consortium, is developing a payment system based on the Corda blockchain platform. Also, Mastercard is allegedly working on its own cryptocurrency wallet.

What Is Libra Project Faced With?

Clouds are clearly gathering over Facebook’s ambitious project. Recently Visa, eBay, and Mastercard have left it.

Intergovernmental organizations, such as the FATF and the G20 also turned against Libra. Attacking the project with allegations bordering on money laundering and consumer protection. The two influential structures obviously remain ardent supporters of the state monopoly on the issuance of currency.

Only a little part of the community supports Facebook’s initiative, contrasting it with an ineffective banking system and financial legislation, which often does not correspond to modern realities. For example, US Senator Mike Rounds, called Libra an example of the technological progress needed to make the US competitive in the digital economy.

However, in terms of market capitalization, Facebook is the sixth-largest company, and it has huge resources and a user base. This means that if the Libra launch still takes place, the project is likely to have a huge network and create a massive ripple effect in the finance industry.

The future of cryptocurrencies seemed cloudless only in theory, although the demand for digital money and the number of market participants are growing steadily – the number of cryptocurrency wallets has already exceeded the 40 million mark. One of the main problems is the lack of infrastructure projects and a high level of fraud. For example, in the ICO era, more than 80% of projects were recognized as a scam.

However, the industry is growing, there are more and more honest projects, high-quality cryptocurrency transfer applications. The key to success is the creation of a comprehensive and convenient solution for all people over the world.

Cryptocurrencies adoption in the modern financial sector is still in question. There is no doubt that the leader in the cryptocurrency market will be exactly the company that can circumvent one of the largest pitfalls – regulation. Obtaining licenses recognized by most countries will provide digital assets with public recognition, and then widespread worldwide.

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