Back in June, Facebook announced that it was going to launch its own cryptocurrency – Libra. The news resulted in the classic mixed results. Some focused on the fact that it would change the financial shape of markets where bank accounts and traditional payments systems are not the norm. Some, notably the FT, picked apart its related white paper and then gave the idea both barrels – slotting into a wider attack on how “nonsensical, pointless, stupid, risky, badly thought-out and blockchainless the whole thing is”. Ooof! There were also concerns about how Facebook was, with a sharpening of its elbows, trying to use its corporate heft to make itself the new centre of gravity in cryptocurrencies (and what the global regulators will all make of this).
After the hype… the fall. PayPal was the first to rapidly backpedal out of Libra and, in an alarmingly swift domino effect, Mastercard, Visa, eBay and Stripe are also pulling out. All those companies were careful not to totally torpedo Libra, but their statements read very much like a Dear John: “It’s not you, Libra – it’s us.”
The Libra Association, set up by Facebook to manage the project, was putting a brave face on it all. “We appreciate their support for the goals and mission of the Libra project,” it said. “Although the makeup of the Association members may grow and change over time, the design principle of Libra’s governance and technology, along with the open nature of this project ensures the Libra payment network will remain resilient.”
Bringing it all back to music, Spotify had been an early and effusive supporter of the idea – and is a founding member of the Libra Association. Spotify co-founder Daniel Ek talked of the revolutionary and democratising power of cryptocurrency, especially in countries further down the global pecking order. He also hinted that it could allow fans to pay artists direct via Spotify. “That can open up massive opportunities where all of a sudden, a user in Japan might pay a creator in Argentina,” he said in June. “And that opens up huge opportunities for how we can further our mission.”
There is utopianism and then there is pragmatism – so it remains to be seen if Spotify will hold to its idealistic belief in Libra or if it will quietly and gingerly step back somewhat. There has been an added complication to the story in the shape of a report to the G7 that suggests cryptocurrencies like Libra must prove they are safe and secure before they gain regulatory approval.