PayPal has decided to distance itself from Facebook’s ambitious cryptocurrency project amid concerns over regulatory scrutiny.
In a statement shared with media houses, the payments company noted: “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.”
PayPal’s decision to exit the Libra Association was confirmed after no representatives from the company showed up in a meeting of the original members of the Libra Association on Thursday in Washington.
Notably, Calibra’s head, David Marcus, was previously the president of PayPal.
In a statement on behalf of Libra Association, Dante Disparte, it head of policy and communication, said: “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.”
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A major setback for the launch of Libra
After Facebook announced its crypto project in June, 28 companies, mostly from the tech and payments sector, became original partners of the Libra Association. Though not officially confirmed, each partner paid $10 million to become a part of Facebook’s initiative. However, they only signed a nonbinding letter of agreement so far.
According to Disparte, 1,500 “entities” are still in line to become a part of Libra. Japanese financial giant Monex also applied to become a member of the association.
Apart from PayPal, other major partners of Libra are also considering to back out of the project as all of them are concerned about attracting negative regulatory attention.
Facebook is now planning to put its COO Sheryl Sandberg on the stands before the House congressional committee in the US to clear the concerns over Libra.
Meanwhile, the crypto project of the social media company is facing an antitrust probe by the European Commission.