PayPal becomes first Libra dropout
Payment company balks as regulators get tough with the cryptocurrency
The first cracks in Facebook’s cryptocurrency project are beginning to show. In the face of harsh criticism from regulators and governments, PayPal has become the first company to abandon Facebook’s cryptocurrency project.
Backed by 28 multinational companies and nonprofits, Libra was banking on the support and stability of partners like PayPal to add transparency to a process that has been seen internationally and on the home front as an attempt to bypass rules on topics such as money laundering and tax evasion. The French government didn’t mince its words when it threatened to block the development of Libra in the EU in early September, with Bruno Le Maire, Economy and Finance Minister of France saying:
“I want to be absolutely clear: in these conditions, we cannot authorise the development of Libra on European soil.”
Each of the companies was required to deposit $10 million into the common pot as a caveat for joining the project. PayPal did not give a reason for leaving the project, however it’s fair to surmise that increased scrutiny from Washington and from G7 likely played a significant role in the move.
It said in a statement: “PayPal has made the decision to forgo further participation in the Libra association at this time and to continue to focus on advancing our existing mission and business priorities as we strive to democratise access to financial services for underserved populations. We remain supportive of Libra’s aspirations and look forward to continued dialogue on ways to work together in the future. Facebook has been a longstanding and valued strategic partner to PayPal and we will continue to partner with and support Facebook in various capacities.”
PayPal is not the only company thought to be having second thoughts about involvement. A Wall Street Journal report last week named Mastercard and Visa as companies reconsidering their position before a meeting on 14 October with representatives from the companies involved. Since that report, Visa’s chief executive pointed out that any involvement was only provisional. Al Kelly told investors: “No one has yet officially joined. We’re in discussions and our ultimate decision to join will be determined by a number of factors, including obviously the ability of the association to satisfy all the requisite regulatory requirements.”
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