PayPal has decided to withdraw from the Libra Association, a non-profit organization made up of 28 companies formed in June 2019 to oversee the creation of the upcoming cryptocurrency and its availability to consumers.
The company did not give a specific reason for its withdrawal from the Libra project, but in a statement published by TheVerge it said:
We continue to support the Libra Association and look forward to continued dialogue on new ways to work together in the future. Facebook has been a long-standing and valued strategic partner of PayPal, and we will continue to work with and support the company.
However, an article published yesterday by the Financial Times reported that PayPal has begun to distance itself from the project due to increasing regulatory scrutiny. The company said it would not attend a meeting in Washington, and the FT reports that at least one of PayPal’s primary concerns was the lack of attention Facebook executives seem to be paying to the significant backlash against Libra. Another unanswered question for PayPal appears to be how the platform will manage to combat money laundering.
On the other hand, in a statement published by TheVerge, Dante Disparte, head of policy and communications for the Libra Association, reaffirmed the non-profit company's commitment to "creating a universal payments network" while criticizing PayPal for not having the "strength" to stick with something as difficult and demanding as the Libra project.
“It takes courage and fortitude for an endeavor as ambitious as the Libra project,” says Disparte.
The journey will be long and difficult. The kind of change that will reshape the financial system will have to be driven by people, not the institutions that serve them, and that will be difficult. Commitment to this mission is more important to us than anything else. So it’s best to know now who isn’t committed.
The loss of PayPal does not necessarily signal the demise of Libra, but either way, the company was a significant economic player, alongside existing member companies like Mastercard and Visa, of the Libra Association.
The loss of PayPal may not be a worrying sign for the project's progress, but the Wall Street Journal reported earlier this week that both Mastercard and Visa, as well as digital payments platform Stripe, were considering withdrawing from the Libra Association over similar concerns about money laundering .
