Online payments provider says it wants to focus on its own core business, as Libra cryptocurrency continues to draw fire from regulators and central bankers
PayPal has become the first company to withdraw from Facebook’s proposed Libra cryptocurrency, amidst intense ongoing regulatory scrutiny of the project.
Libra was first announced in June, and while Facebook took the lead on its development, the project is intended to be managed by an independent Geneva-based association.
PayPal was one of 28 initial firms, which also included Visa, Mastercard, Uber and several charities, who pledged to back Libra by joining the Libra Association and contributing $10 million (£8m) toward the project.
Facebook, however, would control most of the ways users would interact with the currency, which would be offered through Facebook messaging apps and stored using digital wallet software developed by Facebook subsidiary Calibra.
But regulators have expressed doubts about the project, and France and Germany have both pledged to bar it from being used in Europe.
The Group of Seven (G7) economies said in July it would prevent Libra from going forward until all regulatory concerns had been addressed, and central bank chiefs including the UK’s Mark Carney have also said they are sceptical.
Concerns include issues over the protection of users’ data as well as the currency’s potential for money laundering, tax evasion and the destabilisation of existing currencies.
PayPal did not specify why it was no longer backing Libra, saying only that it wanted to focus on “advancing our existing mission and business priorities”.
The company said it remained “supportive of Libra’s aspirations”.
The Libra Association responded by saying its main drive was to “reconfigure the financial system”, a goal that required “commitment”.
“We’re better off knowing about this lack of commitment now,” the group said in a statement.
The Wall Street Journal reported last week that Visa and Mastercard were both reconsidering their positions on Libra ahead of the Libra Association’s first meeting on 14 October with representatives from associated firms.
Since that report, Visa chief executive Al Kelley has pointed out that companies are as yet under no obligation to join the association.
“We have signed a nonbinding letter of intent to join Libra,” he said during an earnings call. “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.”
The Libra Association said on Twitter that ahead of the 14 October meeting of its governing body, the Libra Council, some 1,500 organisations had shown “enthusiastic” interest in participating.