PayPal Withdraws from Libra, Facebook’s Cryptocurrency Project

By: Ilana Siyance

On Friday, PayPal announced that it is withdrawing from the Libra, Facebook’s cryptocurrency project.   In June, when Facebook first rolled out Libra, PayPal was among 28 corporate partners to jump onboard. Libra, which has been in the making for over a year, was designed as a cryptocurrency that could be used to purchase online throughout Facebook’s sites, including Messenger and WhatsApp, across the globe as an international exchange, as a service especially in countries were other online currencies are not available.  As reported by CNBC News, all founding members were expected help govern Libra keeping it independent of Facebook, and also to invest a minimum of $10 million to fund the operating costs, as well as launch an incentive program to drive adoption. Those investments had not yet been made.

“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 democratize access to financial services for underserved populations,” a spokeswoman for PayPal, Amanda Coffee, wrote in an email on Friday.​  David Marcus, who was previously president at Paypal, and who now leads the Facebook project, said PayPal is still “supportive of Libra’s aspirations”, and will continue to partner with Facebook in the future.  

 “We recognize that change is hard, and that each organization that started this journey will have to make its own assessment of risks and rewards of being committed to seeing through the change that Libra promises,” said Dante Disparte, head of policy and communications for the Libra Association.  He said that over 1,500 other companies and organizations have conveyed interest in becoming partners. “We’re better off knowing about this lack of commitment now, rather than later,” he added.​  

PayPal’s exit from Libra may be taken as a sign that something is eerie.  Especially since Facebook added the founding partners to show lawmakers that it doesn’t have unilateral control of Libra. On Wednesday, the WSJ reported that Visa, Mastercard and other financial partners that signed on were also “reconsidering” involvement, after backlash from a host of government officials, congressional members of the Financial Services Committee and global regulators.   Though Libra was announced with much fanfare, it soon encountered an entourage of critics. Federal Reserve Chairman Jerome Powell said, libra raises “serious concerns regarding privacy, money laundering, consumer protection, financial stability”, and over the summer the Fed opened a group to look into it.

​“We will not do anything that we think doesn’t meet our own personal standards, as well as the standards of regulators that we respect around the world,” said Al Kelly, Chief Executive of Visa.