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UPDATE 1-Facebook's Libra faces support test after payment giants jump ship

Mon, 14th Oct 2019 15:12

* Libra Association that is overseeing project is due to

* Geneva meeting to set interim articles of association

* Comes days after Visa, Mastercard, and others abandon
(Adds Vodafone comment on agenda and location of meeting)

By Tom Wilson

LONDON, Oct 14 (Reuters) - Facebook's Libra
cryptocurrency faces a pivotal meeting of backers on Monday,
days after the ambitious project to bring digital coins into
mainstream commerce suffered a severe setback when major payment
firms quit.

Mastercard and Visa abandoned the Geneva-based
Libra Association on Friday, as did eBay, fintech
startup Stripe and payments company Mercado Pago.

The exodus followed warnings from politicians and
regulators, from the United States to Europe, that Libra risked
upsetting global financial stability, undermining users' privacy
and facilitating money laundering.

The latest withdrawals followed the departure of PayPal
from the Libra Association earlier this month, and
leave Facebook without the backing of any major payments firms
for the project, due to launch by June 2020.

At the meeting, which will take place in Geneva, members
will agree interim articles of association, said a spokesman for
Vodafone, one of the highest-profile companies remaining
in the project.

Articles of association are typically written rules that lay
out how a company or organisation is governed.

The Libra Association will also appoint a board at the
meeting, the Wall Street Journal reported this month.

A spokeswoman for the Libra Association declined to comment
on the meeting.

The group said this month that it would give details after
the meeting of the 1,500 "entities" that have indicated
"enthusiastic interest" to take part in the project.

The association, whose remaining 22 members include
ride-hailing firms Uber and Lyft, also consists of non-profit
organisations, venture capital groups and blockchain firms.

But the departure of major financial firms meaning it can no
longer count on a global player to help consumers turn their
currency into Libra and facilitate transactions. This presents a
new stumbling block for Libra's efforts to convince regulators
and politicians about the coin's safety.

France pledged last month to block Libra from operating in
Europe, while the Bank of England laid out high hurdles it must
meet before its launch. U.S. Federal Reserve Chairman Jerome
Powell has also suggested the project could not advance before
concerns were assuaged.

Libra, announced as Facebook expands into e-commerce, will
be backed by a reserve of real-world assets, including bank
deposits and short-term government securities, and overseen by
the Libra Association.

The structure is intended to foster trust and stabilise the
price volatility that plagues cryptocurrencies and renders them
impractical for commerce and payments.
(Reporting by Tom Wilson; Editing by Alexander Smith and Pravin

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