CNBC reported that PayPal is withdrawing from Facebook’s Libra Association. CNBC provided a statement from PayPal:
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 underserved populations.
Facebook announced its Libra cryptocurrency and Calibra, a digital wallet for Libra, in June of 2019. The U.S. Senate Committee on Banking, Housing, and Urban Affairs held a hearing about Facebook’s Libra project on July 16, 2019.
CNBC points out that David Marcus, who leads the Libra project at Facebook was previously the president of PayPal. According to CNBC, PayPay said that it is still “supportive of Libra’s aspirations” and that it will continue to partner with Facebook in the future.
Bloomberg reported that several founding members of the Facebook-led Libra project have been wavering whether to fully embrace the effort. According to Bloomberg, there are concerns about maintaining positive relationships with regulators who have reservations about the initiative.
The Libra Association is a group of 28 founding member companies. The organization asked those members to reaffirm their commitment to the project later this month. Before Libra was unveiled, those companies signed nonbinding letters of intent to explore the association.
CNBC reported that all founding members were expected to invest a minimum of $10 million to fund the operating costs of the association and to launch an incentive program to drive adoption. It appears that those investments have not been made.
Now, with PayPal withdrawing from the Libra Association, things aren’t looking so good. I think it might be a bit scary to be the first company to withdraw from something like this. As soon as one does, though, it creates a path for other companies to choose to leave as well.