PayPal withdraws from Facebook Libra
PayPal announced Friday (4.10.2019) it was withdrawing from the Libra Association, a Facebook-led effort to build a global digital currency.
In a statement, PayPal said it would forgo any further participation in the group, saying instead it would focus on its own core businesses.
“We remain supportive of Libra’s aspirations and look forward to continued dialogue on ways to work together in the future,”
the statement continues.
“Facebook has been a longstanding and valued strategic partner to PayPal, and we will continue to partner with and support Facebook in various capacities.”
the company said in a statement.
A report published by the Financial Times yesterday said PayPal had begun distancing itself from the project amid increasing regulatory scrutiny. The company reportedly signaled its intention to skip a meeting in Washington, DC scheduled for today, and the FT reports that at least one primary concern for PayPal has been the lack of attention Facebook executives have paid to Libra’s considerable backlash. Another key concern is how the platform will combat money laundering activity.
In a statement given to The Verge, Dante Disparte, the Libra Association’s head of policy and communications, reaffirmed the nonprofit’s commitment to
“build a generational payment network".
Disparte also confirms that an upcoming council meeting on October 14th in Geneva, Switzerland, where the Libra Association’s headquartered, is still on:
Building a modern, low-friction, high-security payment network that can empower billions of financially underserved people is a journey, not a destination. This journey to build a generational payment network like the Libra project is not an easy path. We recognise that change is hard, and that each organisation 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. We look forward to the first Libra Council meeting in 10 days and will be sharing updates following that, including details of the 1,500 entities that have indicated enthusiastic interest to participate.
Later on in the evening, Facebook’s communications team sent along another statement from Disparte, in which the blockchain project’s policy chief appears to criticize PayPal for not having the
to stick with something as difficult and demanding as Libra.
“It requires a certain boldness and fortitude to take on an endeavor as ambitious as Libra — a generational opportunity to get things right and improve financial inclusion,”
“The journey will be long and challenging. The type of change that will reconfigure the financial system to be tilted towards people, not the institutions serving them, will be hard. Commitment to that mission is more important to us than anything else. We’re better off knowing about this lack of commitment now, rather than later.”
Losing PayPal does not necessarily signal the eventual unwinding of Libra, but the company was a major financial player, alongside existing members like Mastercard and Visa, of the Libra Association. Facebook’s blockchain chief David Marcus, who oversees Libra and Facebook’s companion digital wallet app Calibra, was also a former PayPal president prior to running Facebook Messenger for the social network.
Losing PayPal, in that context, is not a great sign for the health of the project. The Wall Street Journal also reported earlier this week that both Mastercard and Visa, as well as digital payment platform and processor Stripe, were also considering withdrawing from the association over similar money laundering concerns. It’s unclear if fellow Libra Association member eBay, from which PayPal was spun out in 2015, plans to continue participating.
Well, Qvo vadis Libra?