PayPal withdraws support for Facebook’s Libra cryptocurrency

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PayPal has decided to withdraw from the Libra Association, the 28-member nonprofit organization formed in June of this year to oversee the cryptocurrency’s creation and eventual consumer rollout.

The company doesn’t cite a specific reason, saying only in a statement given to CNBC that it decided “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.”

“We remain supportive of Libra’s aspirations and look forward to continued dialogue on ways to work together in the future,” the statement continues. “Facebook has been a longstanding and valued strategic partner to PayPal, and we will continue to partner with and support Facebook in various capacities.”

However, a report published by the Financial Times yesterday said PayPal had begun distancing itself from the project amid increasing regulatory scrutiny. The company reportedly signaled its intention to skip a meeting in Washington, DC scheduled for today, and the FT reports that at least one primary concern for PayPal has been the lack of attention Facebook executives have paid to Libra’s considerable backlash. Another key concern is how the platform will combat money laundering activity.

PayPal’s official withdrawal from the project is now official. Losing the company does not necessarily signal the eventual unwinding of Libra, but PayPal was a major financial player, alongside existing members Mastercard and Visa, of the Libra Association. And Facebook’s blockchain chief David Marcus, who oversees Libra and Facebook’s companion digital wallet app Calibra, was a former PayPal president prior to running Facebook Messenger for the social network.

Losing PayPal, in that context, is a not a great sign for the health of the project. The Wall Street Journal also reported earlier this week that both Mastercard and Visa, as well as digital payment platform and processor Stripe, were also considering withdrawing from the association over similar money laundering concerns.

It’s unclear if fellow Libra Association member eBay, from which PayPal was spun out in 2015, plans to continue participating. Neither Facebook nor PayPal has immediately responded to requests for comment.

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