Facebook’s Libra cryptocurrency continues to receive a lot of attention. One of the original participants in the project has officially withdrawn its support. PayPal, a company initially eager to pay US$10m to be part of this venture, grows concerned over the scrutiny this project receives.
The Libra project was initially backed by 28 corporate entities. That list includes key players such as Visa, Mastercard, and PayPal. All backers see merit in a digital currency that can be used in conjunction with social media and messaging applications. However, they may have underestimated the lack of legislative prep work conducted by the social media giant.
Facebook has seen a lot of backlash regarding this currency. Policymakers in numerous countries express concerns. The primary reason is how Libra can threaten monetary sovereignty in those countries. It is for this reason that the European Central Bank leans toward not welcoming this currency when it becomes available.
PayPal announced its withdrawal from the Libra Association as follows:
“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.”
This news comes at a crucial time for the project. On the one hand, there is a growing regulatory concern. On the other hand, none of the initial corporate backers have pledged their US$10m share yet. If other companies were to back out, it seems unlikely that Facebook can go ahead with the venture. This initial investment services as a way to fund the operating costs and to launch an incentive program.