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PayPal seems to be worried about the future of Facebook’s cryptocurrency Libra as the development of the forthcoming digital currency has several hurdles on its way before it goes live. PayPal is one of the partners of the Swiss nonprofit Libra Association, which looks after the stability of the stablecoin.
Facebook announced its plan to launch a stablecoin, which will officially roll out in 2020, and will be backed by a basket of financial assets to eliminate the usual cryptocurrency volatility. Libra will be administered by the non-profit Libra Association based in Geneva, Switzerland.
With Libra, Facebook is aiming to attract the billions of ‘unbanked’ in the financial system worldwide by providing them with a new global cryptocurrency that can be easily operated on smartphones. Users will be able to transfer money to their loved ones with Libra without paying excessive transaction fees and compromising their privacy.
PayPal, being part of the Libra association, is worried about the future of Libra as global political and regulatory concerns still remain a burning issue. In fact, the development of Libra has already been facing several political issues in the United States itself.
For instance, a number of US lawmakers, including Congresswoman Maxine Waters (D-CA), the Chairwoman of the House Financial Services Committee along with other Congress members, asked Facebook to halt the development of Libra. Several Congress members wrote an open letter to Mark Zuckerberg regarding the matter. And that’s not all. Recently, both France and Germany have jointly announced that they will not allow Facebook’s Libra to operate on European soil. France’s finance and economy minister has already announced a ban of Libra.
An international outcry by governments is mounting over Libra as central banks,and regulatory bodies are against Facebook’s cryptocurrency, and they have raised several concerns regarding its regulation and distribution.
PayPal investor relations vice president Gabrielle Rabinovitch said to the California-based company signing on to the Libra Association on Thursday that “It’s a non-binding commitment.: He also added:
“And obviously, I think there’s a lot of work to happen before we get to that point where it becomes something more than just a very exciting idea.
The goals and ambitions of Libra are very consistent with PayPal’s overall ambitions in terms of serving the underserved; democratizing access to capital. So, we very much believe in the potential of Libra.”
Looking at the current global scenario, it is going to be an arduous task for Facebook to fulfill all the regulatory requirements and provide a satisfying response to the concerns raised by government entities and personalities of various nations.
This is why PayPal’s concerns about Libra are not without merit.