Confirming speculation that it was having second thoughts about officially joining the Libra Association, PayPal Holdings Inc. disclosed Friday afternoon that it was withdrawing from the controversial cryptocurrency project proposed by Facebook Inc.
“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,” an emailed statement from San Jose, Calif.-based PayPal says. “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.”
PayPal, one of Libra’s 28 initial supporters, spurred speculation that it might withdraw from the project when the London-based Financial Times reported it failed to send a representative to a meeting this week in Washington, D.C., attended by all of the other Libra Association participants. Besides Facebook, the association includes such payments companies as Visa Inc., Mastercard Inc., PayU, and Stripe Inc.
No company, however, reportedly has officially joined yet or put up the $10 million Facebook is asking from each participant. Press reports this week indicated that some initial participants, including Visa and Mastercard, might not follow through.
Facebook referred press inquiries to the Libra Association, which confirmed Friday afternoon that it had received PayPal’s notification that it would not join. “This journey to build a generational payment network like the Libra project is not an easy path,” Dante Disparte, the association’s head of policy and communications, said in a statement.
“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,” Disparte said. “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.”
While backers see Libra and its associated digital wallet as an efficient, low-cost system that could bring payment services to millions of people outside the financial mainstream, the project has come in for withering criticism from banking regulators in many countries, especially Europe, as well as the U.S. Congress. Authorities are worried that Libra could undermine national currencies and provide a channel for money laundering and terrorism financing.
—With additional reporting by Kevin Woodward