Friday , November 15, 2019

Eye on Cryptocurrency: PayPal Skips a Libra Meeting; Ohio Suspends Bitcoin Payments

In a bad week for cryptocurrency, a news report emerged late Thursday that PayPal Holdings Inc. skipped a key meeting of backers of Facebook Inc.’s Libra initiative. And, in the state of Ohio, officials on Wednesday suspended a pioneering site that accepted business taxes via Bitcoin.

Twenty-seven of the 28 companies that have signed on as members of the Libra Association attended the Washington, D.C., meeting, with PayPal as the only no-show, The Financial Times reported. The conference came in the wake of weeks of harsh criticism of the cryptocurrency project from lawmakers, regulators, and central bankers both in the United States and in Europe, who have expressed concerns about how Libra will combat money laundering, protect consumer data, and other issues. The Washington gathering was intended at least in part to work out how to address the blowback, according to the paper.

A PayPal spokesperson did not immediately respond to a request for comment. 

Besides PayPal, four other payments companies are part of the association, including Mastercard Inc., PayU, Stripe Inc., and Visa Inc. Facebook announced Libra in June. The so-called stablecoin will be backed by a basket of short-term government securities and was slated to debut next year.

Now at least some of the backers are said to be having second thoughts about the venture, with concerns growing that regulatory hostility could complicate efforts to launch the coin and could also affect the companies’ own operations. David Marcus, formerly president of PayPal and now the Facebook executive heading up Libra for the social-media giant, took to Twitter this week to defend the coin and downplay the impact of the criticism. Marcus faced sometimes harsh questioning in July from committees in both the Senate and the House of Representatives. 

In another less-than-optimistic crypto development, the state of Ohio’s treasurer said the state is shuttering, at least temporarily, an 11-month-old Web site, OhioCrypto.com, that had been hailed as one of the first government entities to accept cryptocurrency. The treasurer, Robert Sprague, explained in a post on the state’s Web site that Atlanta-based BitPay Inc., the company Ohio hired to process transactions, could be said to be operating a “financial transaction device.” If so, the post explains, the selection of the processor should have been accomplished via a competitive-bidding process, according to Ohio law.

Sprague’s post says the state’s Board of Deposit has asked the Attorney General for an opinion on whether BitPay’s processing “method” constitutes a financial transaction device. “Until a formal opinion is issued by the Attorney General, I feel it is prudent to suspend the website,” Sprague’s post says.

The site was established last November by Sprague’s predecessor. BitPay did not immediately respond to a request for comment.

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