PayPal has announced that it is walking out of the coalition of companies involved in Facebook’s Libra project. Adding to the woes that Facebook is facing with the project, PayPal said that it will not be involved in any further developments regarding Libra and will focus on its core business.
In a recent meeting of Libra supporters held last Thursday, the representative from PayPal failed to show up. Before speculations could develop further, a spokeswoman for PayPal, Amanda Coffee, wrote an email from the company the next day. It stated that, “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.”
It further mentioned that, “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.”
It may be noted that David Marcus, who is leading the Libra initiative from Facebook used to be the president of PayPal, The blockchain team in Facebook also contains many former employees of PayPal.
PayPal, one of the original founders of the Libra Association is the first financial backer to withdraw from the project. The association had 28 founding members when it was launched. It was reported earlier that major credit card companies MasterCard and Visa are also developing cold feet about their association with Libra.
After the exit of PayPal, a tweet from the Libra association stated that, “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.”
After Libra has faced severe push-back from US legislators and Donald Trump, France and Germany have also pledged to block the cryptocurrency from operating in Europe. The companies associated with Libra are already feeling the heat of this opposition and if the situation remains same, we may see more of them distancing themselves from the project in future.
Many of the backers of the project have also declined Facebook’s requests to publicly endorse the Libra due to the fear of backlash from regulatory authorities. This is in spite of Facebook’s efforts to assure the US Congress that Libra will not be launched without addressing all concerns of the regulatory authorities.
It is evident that Facebook will need the support of these large companies to launch Libra with the right amount of credibility. What it needs to do is dispel the concerns and resolve the various issues associated with the project.
If the current plan of launching Libra sometime next year is to be kept on track, Facebook needs to rethink its strategies earnestly.
