Facebook’s upcoming cryptocurrency Libra may have faced enough already by now. But it seems that it could be on the verge of losing another supporting company, PayPal. This was speculated after the company’s representatives failed to show up at a meeting last week.
Reported by The Financial Times, the 28 supporters of the project who happen to be members of the Libra Association were set to meet and discuss the ways in which Libra could overcome scrutiny from regulators.
However, sources did tell the FT that PayPal failed to show up. And this went on to cause worries about what the reason for this action by the company was.
The Libra project that is currently being headed by PayPal’s former president, Davi Marcus, has surely faced many obstacles over months. And if any of the partnering companies decided to quit, then this would be another huge blow to not just Facebook but the overall team.
Apparently, one person from PayPal claimed the company was worried that Facebook had not done enough to address opposition to the project, with specific concerns centred on money laundering.
It doesn’t seem that there was a lot of pre-work done with regulators. [Payments] companies don’t want that [regulatory scrutiny] to bleed into their businesses.
The sources went on to note that it was likely for PayPal to pull back down but didn’t deny it could rejoin the project at a later date. It’s believed that Facebook’s Libra Association members have each pledged $10 million to take part in the project, but are yet to hand over the cash.
The report comes just a few days after Marcus fired back at a Wall Street Journal (WSJ) report that claimed Mastercard was thinking about possibly pulling out of the project.
He didn’t explicitly deny the report but said that the initial (and official) group of Libra‘s partners “will be formalized in weeks to come.”
Updated on 07/10/2019
As feared, yes, PayPal did make an announcement, deciding to stop supporting the project by Facebook. This means that the company will forgo any further participation in the Libra Association. As stated in the announcement, PayPal will instead focus on its own goals and missions in place of the commitment that is now broken.
Oddly though, Facebook’s project leader David Marcus happens to be PayPal’s former president. This is a connection that everyone believed to link the two together for a long time but it now seems not to be the case. However, the online payments company did say it remains supportive of the project and its aspirations and that it won’t be the end of its relationship with Libra.
In response to the news, Libra’s officials stated that they understand the action taken by PayPal and that Libra supporters have to make their own risk assessments and decide what direction they wish to take.
The fact that Libra has been a target of criticism and scepticism ever since it was announced in June this year likely did not help its cause.
Officials from governments, organisations and agencies have clearly spoken against the project. In return, Facebook attempted to reduce their fears of Libra, stating that the Libra Association is there to control its authority over the cryptocurrency.
But all this has fallen to deaf ears as with PayPal’s withdrawal now, maybe this is a sign of even the supporters feeling the heat and having a change of heart. Additionally, other backers have been reported to supposedly ‘reconsider’ their involvement.