trending Market Intelligence /marketintelligence/en/news-insights/trending/LPPsGaU0QlDmHrrkdkBdNA2 content esgSubNav
In This List

PayPal withdraws from Facebook's Libra initiative amid regulatory heat

Blog

Europe: 5 key OTT trends to watch in 2022

Podcast

Next in Tech | Episode 50: InfoSec spending up, again…

Blog

Broadcast deal market recap 2021

Podcast

Next in Tech | Episode 49: Carbon reduction in cloud


PayPal withdraws from Facebook's Libra initiative amid regulatory heat

PayPal Holdings Inc. has become the first to withdraw from Facebook Inc.'s initiative to launch a digital coin.

Facebook unveiled its digital coin, called Libra, just four months ago. Intended to launch in 2020, the initiative has already faced backlash from legislators and regulators in the U.S. and around the world. PayPal was one of several major companies that said it would invest about $10 million in a consortium that would govern the digital coin. But now, the payments company is stepping back from the effort.

"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," the company said in an emailed statement. "We remain supportive of Libra's aspirations and look forward to continued dialogue on ways to work together in the future."

Although rescinding support from Facebook, PayPal will continue to partner with and support the tech giant "in various capacities," the company said.

A day before PayPal pulled out, the Financial Stability Board said the potential scale of cryptocurrency assets could bring regulatory challenges around the world. It has begun work to identify what regulations exist that apply to stable coins in various jurisdictions and intends to report to the G-20 any appropriate actions that need to be taken once the assessment is complete. The FSB is responsible for monitoring the global financial system and making recommendations for changes.

In the U.S., the Democratic majority of the House Financial Services Committee has proposed a bill that would issue fines to large technology companies that operate as financial institutions or issue digital currencies. In the U.K., the Bank of England has said it would approach Libra "with an open mind but not an open door." In Italy, the central bank has warned the public against use of "false" or "parallel currencies" issued by platforms with banking functions.

Visa Inc. and Mastercard Inc., two other major financial institutions that initially signed onto the project, are also reportedly considering stepping back, people familiar with the matter told The Wall Street Journal earlier this week. Executives of some of Libra's backers have declined Facebook's requests to publicly support the project, the people said.

Uber Technologies Inc., Stripe Inc., eBay Inc., Lyft Inc., Spotify Technology SA, Iliad and Vodafone Group PLC are among the other firms that initially committed to help build and maintain the Libra payments network.

Dante Disparte, head of policy and communications for the Geneva-based Libra Association, called the project "a journey, not a destination." The Libra Association is the consortium of Facebook and other entities that oversee the Libra project.

"This journey to build a generational payment network like the Libra project is not an easy path," Disparte said in an emailed statement. "We recognize that change is hard, and that each organization that started this journey will have to make its own assessment of risks and rewards of being committed to seeing through the change that Libra promises."

The Libra Association intends to share further updates after the first Libra Council meeting on Oct. 14.