Payment processor PayPal has decided to pull out of Facebook’s proposed Libra cryptocurrency project amid more regulatory oversight into the project. A payment processor with a track record for an above-board offer, PayPal has decided not to invest time and effort into Libra, Mark Zuckerberg’s attempt at cryptocurrencies.
Another 27 multinational and non-for-profit companies are still backing the project despite regulatory headwinds. Facebook will let Calibra, a subsidiary, establish a communication channel between Libra and consumers.
Meanwhile, PayPal published an official statement with which it pulled out of the project:
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.
The Mainstream Leaves Libra Before It Even Starts
PayPal seems not to be the only company that is now retiring from the ambitious project. MasterCard and VISA, two of the financial companies to support Libra have been reportedly reconsidering their positions. An upcoming meeting on October 14 will shed more light as to what these companies plan and how they will be involved with Libra – and if. The Wall Street Journal was the first media to raise suspicions about VISA and MasterCard’s involvement, citing people close to the matter.
Meanwhile, VISA’s CEO, Al Kelly, said that the participation of his company into the Libra project was provisional and therefore subject to changes:
“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.”
Regulators Sending Chills Down Spines
Libra holds a bold promise for a world free of governmental oversight, hence the name of the cryptocurrency. Yet, where some see a libertarian dream come true, others have been rising suspicions about misused of tax practices.
Washington and Brussels regulators have said that Libra may be an attempt to mask money laundering practices as well as tax evasion – two specific areas that have been a particularly sensitive topic for most regulators out there.
To make things worse for the prospects of the cryptocurrency, French officials have stated that Libra will not be allowed in the European Union. US watchdogs have warned that trying to tie the value of Libra with a number of reserve currencies was an attempt to gain protectionism at no significant value for the global economic system.