Paypal backs out of Libra according to a statement released by the company. The report comes after rumours of dissent among the backers of Facebook’s Libra.
According to an announcement by Paypal, the company is withdrawing from the Calibra Association. The company will no longer be a backer to the cryptocurrency. There was no particular reason given as to the withdrawal. However, there is a possibility it may rejoin in the future.
Facebook’s Libra has come under heavy fire from multiple sources in the last few months. The introduction of a cryptocurrency has been seen as a potentially dangerous precedent. As a result, there was a massive backlash from the global community. In particular, the governments of the world voiced the danger of a privately owned currency belonging to a non-bank. The US senate and Congress lambasted David Marcus, CEO of Libra, in two separate hearings on the Hill. France also compared Libra to a cancer and proposed their own cryptocurrency called “EuroCoin”.
The rumours that Libra was losing its backers was making the rounds in the last few days. 2 days ago Paypal confirmed it when they backed out of Calibra Association. David Marcus had made a public statement via twitter declaring that Libra was still on track and they were working to comply with multiple governments and agencies. According to the agreement, it costs $10 million dollars and an invitation to become part of the Calibra Association. Calibra is the parent organisation that facilitates Libra Tokens.
While the association’s initial members were sold on the benefits of having a seat at the table and guiding Libra to launch, PayPal appears to have concluded the backlash outweighed those benefits. It left open the possibility of some involvement at a later date. “We remain supportive of Libra’s aspirations and look forward to continued dialogue on ways to work together in the future,” the company said in a statement.
For Facebook, losing PayPal could spell trouble for its argument that Libra is a decentralized system that Facebook does not intend to dominate. That vision rests on other companies building wallets and services that compete with Facebook, which has the built-in advantage of its 2.4 billion users. The company has set up a division run by Marcus, called Calibra, that oversees a Libra wallet that will let users hold and spend the currency. With PayPal’s departure, the association loses a critical partner with a broad network of vendors and the expertise to design a competitive Libra wallet. PayPal has its own ecosystem of payment apps, including Venmo.
In a statement, Libra Association head of policy Dante Disparte said that Libra was an ambitious project that requires “boldness and fortitude” from its members. “We’re better off knowing about this lack of commitment now, rather than later,” he said. He also suggested the association could absorb the loss of one member, noting that “1,500 entities … have indicated enthusiastic interest to participate.” The association has said it plans to have 100 members by launch, which it says will happen when regulators are satisfied with its plans. That could take a while.
