The reasons for the Mastercard withdrawal from the Facebook digital currency project Libra were not only difficulties with regulators but also concerns about the observance of the business model. This was stated in an interview with the Financial Times by the head of Mastercard, Ajay Banga.
According to Ajay, the key members of the Libra Association could not guarantee “not to do anything that does not fully comply with the law,” when it comes to KYC / AML standards and data management.
In addition, Mastercard CEO alarmed that Facebook positioned Libra as a tool to increase financial accessibility, but then wanted to associate it with Calibra’s signature digital wallet.
“It went from this altruistic idea into their own wallet. I’m like: ‘this doesn’t sound right,’” said Banga. The currency issued by governments should be understood as a tool that you should be able to use to buy, for example, rice or bicycles. But “If you get paid in Libra [coin] . . . which go into Calibras, which go back into pounds to buy rice, I don’t understand how that works,” he said.
Some analysts point out that Mastercard had other reasons to refuse to participate in the project, since a blockchain-based payment system could become a global online payment network, creating a significant threat to Mastercard.
Nevertheless, Banga does not consider the emergence of such a system a threat:
“We have more than 30 thousand banks around the world, associated with 60 million trading companies, billions of users in 200 countries, and the systems comply with the local regulation of each of these countries. Everyone, even the digital giants, understands what complicated work has been done and that it is better, faster and cheaper to work with Mastercard,” he added.