A number of the initial investors who vetted Facebook’s cryptocurrency venture, Libra, is reportedly backing down because of intense government scrutiny.
At least two of the early members of the Libra Association, the organization co-founded by Facebook to oversee the Libra cryptocurrency, told reporters from the Financial Times that they are considering leaving the cryptocurrency project because of the staunch regulatory scrutiny it attracts in the recent times. Earlier, two other early backers have already expressed their willingness to get out of the Association when the time comes.
One of the companies even said that they only joined the Libra Association because of a clause that would allow them to leave at their own discretion.
The investors said they were concerned that the extra attention would put pressure on their other business ventures, the report said.
On June, Facebook announced that they are developing a new cryptocurrency, called Libra, which, unlike bitcoin, is secured and is backed by real-world currencies and government securities. However, roadblocks came from different governments and regulatory bodies around the world as they expressed their concern over how th new digital money would impact global financial systems.
House Democrats sent the company a letter in July telling them to stop its plans for the digital money.
“If products and services like these are left improperly regulated and without sufficient oversight, they could pose systemic risks that endanger the U.S. and global financial stability,” said a letter from Democrat congresspersons.
“The scant information provided about the intent, roles, potential use, and security of the Libra and Calibra exposes the massive scale of the risks and the lack of clear regulatory protections,” the letter read. “These vulnerabilities could be exploited and obscured by bad actors, as other cryptocurrencies, exchanges, and wallets have been in the past.”
The cryptocurrency also did not escape the ire of President Donald Trump, who said that if Facebook wants to be a currency, they should apply for a banking charter instead. Trump’s sentiments were also echoed by other high state officials and politicians.