PayPal Quits Facebook Cryptocurrency Project Libra

PayPal has become the first company to drop out of Facebook’s Libra cryptocurrency, as Zuckerberg’s answer to a global currency continues to face slapdowns from regulators around the world.

PayPal bailed out without giving a reason. It said in a statement:

“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.”

Between Maxine Waters, chair of The House Financial Services Committee, screaming at Libra and the French picking up swords to protect the euro, Zuckerberg is facing some heavy opposition. The European Commission has also requested that Facebook and the Libra Association has to come up with some answers relating to financial stability, money laundering, and data privacy risks.

Don Guo, CEO at Broctagon Fintech Group noted:

“While it’s another huge blow to Facebook’s digital currency project, Paypal withdrawing from Libra comes as no surprise. Given the frosty reception that the currency has received from the likes of France and Germany, Paypal will undoubtedly be thinking about the possibility of regulatory scrutiny.

“How long these cold feet will last remains to be seen. Payments giants like Paypal, Mastercard and Visa seem to be waiting to see what other market players will do. While some level of caution is sensible, avoiding any risk whatsoever could have a serious opportunity cost. Across the globe, new digital payment systems like WeChat Pay are taking off, and with Facebook and WhatsApp’s global community, Libra has the potential to take this to the next level by creating a bigger, more global version that could unite the world’s payment systems. Those who don’t get involved now could find themselves left out of the upcoming digital payments revolution.”

According to the Financial Times, this is part of EU financial commissioner Valdis Dombrovskis’ efforts to asses whether projects such as Libra should be regulated in the EU, if new regulation is required, or whether the ‘cryptocurrency‘ should be allowed to operate at all.

Not if the French have a say.

According to TNW, losing PayPal is undoubtedly the biggest blow for the project to date, but rumours about other partners, including MasterCard and Visa, pulling out have been mounting for weeks.