PayPal which was one of the first companies to join Facebook’s planned cryptocurrency network becomes the first to pull out of the alliance waiting to launch Libra, Facebook’s digital currency.
PayPal made this announcement on Friday but didn’t give details for pulling out. Facebook revealed in June, its plans to launch Libra, with the banking of some credible financial institutions including PayPal, Mastercard and Visa. However, the launch of the cryptocurrency network has been delayed due to regulatory concerns that have been raised worldwide. France and Germany pledged to block it from Europe once it launches.
PayPal didn’t say specifically what prompted its decision; it however said it remained supportive of the initiative but wants to focus on its core businesses. The financial institution was one of the members of the Libra Association, a group of 28 companies, alongside other non-profits helping to develop the crypto company.
Libra association responded to PayPal’s withdrawal that it was aware that reconfiguring the financial system would be hard and that commitment to the mission was very key. “We are better off knowing about this lack of commitment now,” it said in a statement.
In June, when Libra first revealed its plan to unveil, it said that people would be able to make payments with the currency through its own apps, as well as on instant messaging service WhatsApp and that the platforms would be protected. Facebook also said that from next year, users will be able to buy Libra through its platforms and store in a digital wallet called Calibra.
Facebook also said that Libra would be managed independently and backed by real assets and that making payment with it would be very easy. It said its target were the people especially women who do not have bank accounts. It said the issue with having no bank accounts affected people in developing countries.
This will not be Facebook’s first attempt with cryptocurrency. A decade ago, it launched Facebook Credits, a virtual currency that enabled users to purchase items in apps. It however, ended that project after about two years, when it failed to gain traction.
Aside from the scepticism of regulators all over the world, the biggest test would be if people would be willing to exchange their money for a virtual currency which would be traded on platforms which have been heavily criticised for the misuse of personal data.
The Libra Association is set to hold its first meeting of its governing body on 14th October.