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Pioneering digital payments firm PayPal will no longer be a part of the Geneva-based non-profit Libra association, an alliance that oversees Facebook’s digital currency program Libra. This move come after reports that PayPal is worried about Libra.
The payments giant has not stated any precise reason behind its withdrawal from the Libra association, only saying that the company will focus on advancing its existing services.
The Libra Association was formed in June 2019 in Geneva, Switzerland. The Association has about 28 members including the U.S. giants Uber, Lyft, Spotify and Visa, and it manages the development and distribution of Facebook’s upcoming digital currency Libra. The U.S. payments processor PayPal said on October 4th that “PayPal has decided to forgo further participation in the Libra Association at this time,” making it the first member to exit the group.
The statement continues:
“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.”
According to a report published in the Financial Times, PayPal has started to distance itself from Libra amid the rising regulatory concerns and political scrutiny. The report further stated that the lack of attention Facebook’s executives have paid to Libra’s considerable backlash and Libra’s ability to fight against anti money laundering (AML) activities are two of the key reason behind PayPal’s withdrawal.
Dante Disparte, the Libra Association’s head of policy and communications said that the Libra Association stays true to its commitment to “build a generational payment network.”
Dante Disparte further said in a statement:
“The type of change that will reconfigure the financial system to be tilted towards people, not the institutions serving them, will be hard. Commitment to that mission is more important to us than anything else. We’re better off knowing about this lack of commitment now, rather than later.”
Companies Involved with Libra Are Feeling the Regulatory Pressure
PayPal withdrawing the Libra Association might not be a great sign for the further development of the cryptocurrency project. Other members of the Libra Association include other major payment processors such Visa and MasterCard, as well as the digital payment platform and processor Stripe, are also reported to be having second thoughts regarding their involvement in Libra as they do not want to attract regulatory scrutiny.
Ever since Facebook announced its Libra project, many financial experts and lawmakers in the U.S. as well as in other parts of the world have been criticizing the social media’s digital currency.
Previously, the CEO of the social media giant, Mark Zuckerberg, was requested to stop the development of Libra by U.S. Congress members. Now, some of the most powerful European leaders have publicly stated they would not authorize the use of Libra in Europe..