PayPal announced Friday that it will no longer be part of Facebook’s Libra cryptocurrency project. The company said that while it is quitting the Libra Association it remains “supportive of Libra’s aspirations,” and that the firm will continue to work with Facebook in the future.
“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 democratise access to financial services for undeserved populations,” the firm said in a statement.
PayPal did leave the door open to them rejoining the project at a later date. The firm said the social media giant “has been a longstanding and valued strategic partner to PayPal,” and that it will “continue to partner with and support Facebook in various capacities.”
Losing the backing of an industry giant like PayPal is a big blow to the Facebook project. Especially as the project is being led by David Marcus, a Facebook executive who previously served as PayPal’s president.
Lawmakers have been strongly skeptical of the Facebook cryptocurrency project. In July Congress held cryptocurrency hearings focusing on Facebook Libra, with members of both parties criticizing the digital currency idea. That follows skeptical comments from President Donald Trump and Fed chief Jerome Powell.
And on Thursday, the Federal Reserve’s vice-chair for supervision, Randal Quarles, gave skeptical commentary on crypto at the European Banking Federation’s summit in Belgium.
“Although there is a small risk to financial stability today there is no doubt the potential scale of stablecoins and other cryptoassets yet to emerge may pose regulatory challenges,” he said.
Facebook has been trying to reassure Congress that Facebook Libra will not launch until U.S. policymakers’ concerns are resolved.
On Sep.24, David Marcus, head of the Calibra digital wallet division head, told Congress that Facebook is committed to working with regulators and getting permission before launching.