Ajay Banga questioned Facebook and said that he did not understand how to make money with cryptocurrency. The executive criticized the idea of creating the Calibra wallet and said that he did not like it.
The CEO of the MasterCard Corporation, Ajay Banga, censured Facebook and his cryptocurrency project Libra by saying that he did not understand how the money would be made with it and that the creation of the Calibra wallet was not in line with the proposal to promote a currency of global reach.
About four months after MasterCard withdrew from the Libra Association, a conglomerate of companies supporting the Facebook initiative, the Indian executive questioned the events that occurred after the group was formed and he said that the regulatory issue and the business model influenced the decision of the multinational company to step aside.
According to The Financial Times, Banga noted that the members of the association would not commit to doing something that did not fully comply with local laws and cited measures such as Meet Your Customer (KYC), Anti-Money Laundering (AML) and data management. Banga stated that he had directly asked the major promoters of Libra if all these aspects would be established in writing and he said that they would not.
Regarding the project’s profitability, Banga argued that not understanding how income would be generated, the work would be done in a way that he would not like, which accelerated his abandonment of the project. Although the CEO’s reasons are significant, there was an additional element that activated his alarms about the project’s viability. It is about the creation of the Calibra wallet, a project that would be used to manage the participants’ funds.
Banga indicated that this proposal had gone from an altruistic idea (of creating a global currency) to its own wallet and said that he did not like it. Banga said that to really promote financial inclusion, it is necessary to offer instruments that can be understood and used to buy different products, so he added that did not understand how that worked.
The reasons that led MasterCard to withdraw from the Libra Association could also be based on the integrity and data management of the participants. This is due to the scandal triggered by Facebook and the company Cambridge Analytica for the bad data management practices by 87 million users of the social network, which could be considered as one of the largest episodes of violation of user privacy to date.
With this background, and after questioning some of the main decisions that were made, not only Mastercard stepped aside. Other companies such as Visa, eBay and PayPal, among others, have said that, at that moment, they were withdrawing from the Libra project to concentrate on other business models.
It should be noted that it is not the first time that Banga has referred to Bitcoin or cryptocurrencies in general. In October 2017, the executive said that cryptocurrencies not created by governments were trash, but would support government initiatives to create new state-controlled payment mechanisms.
By Alexander Salazar