Dive Brief:
- British telecommunications conglomerate Vodafone left the Libra Association, the company and association confirmed Tuesday. The departure means 20 of the 28 original backers remain attached to the Facebook-led cryptocurrency project.
- The resources Vodafone previously set aside for Libra will go toward expanding the M-Pesa mobile payments app used by about 35 million people — mostly in Africa — to spend, borrow or send money, the company said in a statement.
- Facebook originally intended to launch Libra in the first half of 2020, then said it would address regulatory concerns before launching. When asked this week in Davos, Switzerland, for a potential timeline, Dante Disparte, head of policy and communication with the Libra Association, said, "We'd rather go slow and get it right, than assign a deadline to launch that keeps us from solving the problem of payments for those who need this solution most."
Dive Insight:
Vodafone’s exit follows those of Visa, Mastercard, Stripe, EBay, Booking Holdings and PayPal in October. But although at least one of those companies, Visa, cited "regulatory expectations" in its reasoning for not proceeding, Vodafone shares a mission with Libra: serving the underbanked.
"We have said from the outset that Vodafone’s desire is to make a genuine contribution to extending financial inclusion," a company spokesperson said in a statement. But Vodafone can most effectively bring affordable financial services to the poor through M-Pesa, the spokesperson added, according to CoinDesk.
Libra’s marketing materials indicated that 1.7 billion of the world’s people are without financial services, an issue the Facebook-led project seeks to address by making it easier for people to transfer funds between one another.
Vodafone faces a payday-loan hurdle in its biggest market, Kenya, where a sharp uptick in mobile lending and lax government oversight have left consumers open to what Google has called “deceptive and exploitative” terms. The tech giant in August banned Android apps offering loans with payment cycles of less than 61 days. But short-term loans — some with 200% annualized interest rates — are still easy to find, Bloomberg reported.
Vodafone said it "will continue to monitor the development of the Libra Association and [does] not rule out the possibility of future cooperation."
The telecom’s departure is the first since the Libra Association signed its charter in October. Bertrand Perez, the association’s managing director and chief operating officer, predicted at that time that the project would have 100 members attached before it launches. A source familiar with the situation told CoinDesk the waitlist to join sits at more than 1,500 organizations.
"Although the makeup of the Association members may change over time, the design of Libra’s governance and technology ensures the Libra payment system will remain resilient," Disparte said in a statement announcing Vodafone’s exit. "The Association is continuing the work to achieve a safe, transparent, and consumer-friendly implementation of the Libra payment system."
Swiss finance minister Ueli Maurer last month said the Libra project "has failed" in its current form because the basket of currencies that are meant to back the digital currency haven’t been accepted by the issuing national banks.
