Regulators Have Doubts About Facebook Cryptocurrency. So Do Its Partners.

The largest American cryptocurrency company, Coinbase, was one of Libra’s 27 initial partners. But when the partnership was announced internally, several Coinbase employees expressed concern about their company joining forces with a giant company like Facebook with a spotty record on issues that matter to cryptocurrency fans, like privacy, according to two company employees.

A spokeswoman for Coinbase declined to comment.

Joe Lallouz, the chief executive of Bison Trails, another cryptocurrency company that joined Libra as a partner, said he was also skeptical when Facebook approached him.

“My initial reaction was: ‘You don’t have the best track record from a data privacy perspective,’” Mr. Lallouz said in an interview after the announcement. “Facebook’s reputation around data privacy and being trustworthy is against the crypto ethos.”

But Mr. Lallouz said Facebook had shown that it was serious about protecting the privacy of its users, in part by ensuring that it does not have too much control over the project.

Facebook executives said the design of Libra was inspired by the decentralized structure of Bitcoin, with governance given over to the association, in which Facebook will only have one vote out of a potential 100 partners.

“Already, they are relinquishing control and ownership over this, which is huge,” said Mr. Lallouz.

The partners are expected to meet in the coming months to write a charter that will govern the association.

Facebook’s history with partners has added to their caution. The game-maker Zynga, for example, faced a dramatic loss of revenue after Facebook backed away from a close relationship with the company. Facebook also strained relationships with many publishers last year when it changed the algorithms behind its news feed to de-emphasize news stories.

“This is a huge opportunity, but there are a lot of details that still need to be worked out,” Mr. Lallouz said.

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