t is not surprising news that controversy surrounds Facebook’s cryptocurrency project, Libra. The project faces debate and scrutiny that arguably has been unseen in the cryptocurrency sphere. Yesterday, PayPal, one of the largest online payment systems, has announced that it would be pulling out from the project.
Without providing a reason, Paypal made the decision to leave on its own, in a statement it said, “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 undeserved populations.”
To be involved with the Libra project, companies were required to pledge $10 million USD into a common pool. To date, this $10 million has not been handed to Facebook and companies have only signed nonbinding letters of intent. These reps totally more than two dozen are known as the Libra Association.
The news of PayPal’s departure comes less than a week after a Wall Street Journal report listed MasterCard and Visa as companies that were also reconsidering their support before a meeting on October 14 with reps from Visa Inc., MasterCard Inc. and the other companies within the Libra Association. The meeting’s goal is to review a charter for the group and appoint a board of directors.
Al Kelly said earlier in July, that “It’s important to understand the facts and not any of us get out ahead of ourselves.”
Many of the concerns surrounding Libra revolve around how to platform and cryptocurrency will be secured, specifically how the network can protect the privacy of its users and how it will safeguard against criminals who intend to use it to launder money.
Federal Reserve Chairman Jerome Powell told legislators he had “serious concerns” about Libra and the company’s timetable of launching it next year. Libra has seen equal scrutiny in France as the French government has said it plans to block the development of Libra in the European Union.
However, it should be noted that Libra has speculated positive results, which Facebook, vehemently defends. Facebook hopes to provide financial services to those how do not have bank accounts for various reasons. The company also seeks to reduce the cost of sending money worldwide, by saving the vast many migrants who send money worldwide nearly $25 billion in total remittance fees.
Some analysts have even said that Libra cold help diversify the revenue base of the digital consumer economy.
The Wall Street Journal has reported, that the U.S. Treasury Department sent letters to companies including Visa, Mastercard, and PayPal and asked for “a complete overview of their money-laundering compliance programs and how Libra will fit into them.”
David Marcus (former CEO of PayPal, who now heads Calibra and the Libra Project) said on Twitter in a multi-tweet response to the same WSJ article cited above, “I can tell you that we're very calmly, and confidently working through the legitimate concerns that Libra has raised by bringing conversations about the value of digital currencies to the forefront.”
Facebook will need to quash the rumors of the solidarity of its association as soon as possible. As support continues to waver, it is unclear who will continue to support the digital currency project in the long-term.