- Lost in Libra's regulatory limbo has been a discussion of the cryptocurrency's stated intention: to bring the global poor into the modern financial system.
- Many non-profits have been working on just this issue for a very long time. To its credit, Facebook recruited a few of most forward-thinking organizations into the association.
- Those non-profits who had already seen potential advantages in blockchain technology to better serve their target populations.
- Were these do-gooding organizations brought on as mere window-dressing? Women's World Banking and Mercy Corps tell CoinDesk they won't stick around if their missions aren't served by Libra.
Who can unlock true global financial inclusion? Perhaps a Harvard dropout can succeed where so many others have failed.
According to its announcement materials released in June, the top priority for Libra, the stablecoin invented by Mark Zuckerberg's Facebook, is to reach the unbanked. Yet, most of its founding partners are laser-focused on the developed world, such as Uber, Mastercard, Stripe and eBay.
So how does the association expect those who struggle the most with financial access to get their hands on its low-volatility cryptocurrency? The group's four non-governmental organizations (NGOs) might be key.
Among the 27 founding partners (it was 28 before PayPal dropped out of the project last week), there's a small cadre of four non-profits focused on reaching that population: Mercy Corps, Women's World Banking, Kiva International and Creative Destruction Lab.
To date, there have only been hints about how the rollout of the Libra cryptocurrency might actually work – in part because most of the attention since June has been on regulators' general opposition to the project. It's easy to forget that Libra was intended for places like Uganda, Pakistan and Indonesia when its fate is in the hands of the U.S. Congress and Frankfurt.
But the impact partners are cautiously optimistic about Libra's potential and pleased with the association's willingness to give them a full seat at the table, despite the fact that they won't be buying a Libra Coin, the $10 million governance token the rest of the partners are on the hook for.
"This little group of NGOs ... we're not being set up to be a hood ornament from the inside," J. Tom Jones, chief operating officer of Women's World Banking (WWB), told CoinDesk in an interview. "That was really important from a risk analysis perspective."
All eyes on Oct. 14
The association is making decisions about how it will govern itself right now, and both partners CoinDesk spoke with say they believe they have a full voice at the table. Libra Association members will gather in Geneva on Oct. 14 to formally ratify the group's charter.
"If we had been presented the opportunity to join something where all the questions were answered and everything was baked, it probably wouldn't have been compelling to us," Jeremiah Centrella, general counsel for Mercy Corps, told CoinDesk in an interview.
For his part, Jones saw no particular danger to his organization in helping get the new cryptocurrency off the ground.
"Ultimately, Women's World Banking, as well as the other impact partners, we hold the ultimate decision in that we can leave," he said. "I firmly believe if we leave, it sends a big signal."
Since PayPal's departure, spokespersons for Mercy Corps, Women's World Banking and Kiva all confirmed their plans to remain in the association. Creative Destruction Lab has not replied to CoinDesk's request for comment.
That said, if something did move the organization to leave, Jones promised:
A natural question for impact partners: Are they receiving financial support from Facebook or the Libra Association? Jones declined to comment. A spokesperson for Mercy Corps said, "There was conversation around grants for actual operation. And that's part of a conversation we're having."
The Libra Association has limited its impact partners to organizations with at least a five-year track record of financial inclusion programs and a $50 million operating budget.
Mercy Corps and WWB both have a strong emphasis on advancing the financial outcomes of their respective constituencies.
Mercy Corps has always taken a market-driven approach to interventions, Centrella explained. "By the time Facebook reached out to us, we had already created an executive team working group on distributed ledger technology," he said.
Centrella's non-profit has worked on things like microfinance and financial inclusion, seeking community-driven ways to come back from disaster or achieve economic growth. It also put out a white paper in 2017 on the potential for blockchain in the non-profit sector.
But why the early interest? Mercy Corps generally thinks cash is king in helping overcome pressing challenges. It may be more effective than other approaches, but cash has its own challenges.
Cash doesn't work if the entire market has been destroyed, for example. It can also be difficult to physically deliver cash and to do so in a local currency. Plus, it leaves the worst paper trail (which non-profits need in order to document outcomes).
So Libra, therefore, offers hope to address some of the drawbacks of paper currency.
Libra has been constructed using some of the best features of various cryptocurrencies, and it is structured around a proof-of-stake system, one that's very selective about who can participate early on. That architecture has had its troubles recently, but the Libra Association hasn't shown any evidence that it will be rigid about its governance and indicated an interest in opening up participation over time.
WWB's Jones emphasized similar points. His organization helps facilitate micro-finance (the giving of very small loans to very small business owners), rather than acting as the lender itself. This includes providing services, such as insuring short-term loans against default if borrowers need to close up shop for a few days.
And the poorest people of the world are pinched the most acutely by the global financial system's fees.
"No cost structure," Jones said of Libra. "That is a huge victory."
Libra could also potentially make the system WWB facilitates work more quickly. For borrowers, he said it could eventually save trips back and forth to the bank, leaving them more time for business. For its insurance business, Libra can allow instant payments of claims.
In fact, the power of this speed came up again and again with both WWB and Mercy Corps.
Centrella offered the most vivid example, saying:
Influencing the juggernauts
But will Fortune 500 companies follow the advice of the non-profit crowd?
Jones said he's been pleasantly surprised by the way his organization has been treated as full member of the association.
"At least from my exposure and participation, everything is being done by consensus," Jones said.
Centrella noted that Big Tech's efforts to be helpful in the developing world haven't always worked out. Inviting the non-profits to help guide the project provides some assurance against similar missteps.
"I do work with a lot of corporate partners and I think all of them have the best intentions in what they are doing even if they are extremely removed," Jones said. "One thing I have to say: My continuous interaction with [Facebook blockchain lead] David Marcus with his team, they just continue to demonstrate, in a very passionate way, that they really want to figure this out."
Through the regulatory maelstrom, Centrella wants the world to let the association take its shot at these problems.
"I do hope that it will launch and if it does we are quite hopeful that it will have a transformative positive input," he said.
And while Jones acknowledged the suspicion directed at Facebook as the lead, he was similarly hopeful, saying, "All the greatest ideas in the world were told at some point that it's not going to work," he said, adding:
Ian Allison contributed reporting.
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