Facebook’s Libra Association, the independent, not-for-profit membership organization that will be responsible for overseeing the forthcoming digital coin Libra, seems to be falling apart. According to reports PayPal, one of the organizations backing Libra, maybe on the verge of pulling out.
Facebook, arguably one of the most popular and widely used social media platforms is going through a turbulent phase right now. With the official announcement of its crypto endeavor earlier this year in June, the platform has un-wantingly attracted attention and criticism of regulatory bodies from across the world.
The regulatory blows have not been easy for project Libra nor for the people and companies involved in the endeavor, as they have managed to form cracks in the coalition Facebook had assembled for its global cryptocurrency-based payments network. The Financial Times report revealed that representatives from PayPal did not attend a Libra Association meeting on Thursday.
Headquartered in Geneva Switzerland, the Libra Association comprises of a group of diverse organizations from around the world that are backing the stable coin project. The founding members include 28 companies backing Libra including Mastercard, Visa, PayPal, Uber, eBay, Coinbase and Andreessen Horowitz amongst others.
Representatives from all the 28 Libra backers were supposed to meet in Washington on October 3rd. The agenda of the meeting was to discuss the regulatory backlash that Libra has gotten and to figure out how to handle it in order to move forward with the project. All the backers were present except for PayPal. The absence of the payments system company is being viewed by many as a sign of the looming departure of PayPal from the Libra Association.
Several reports have suggested that the company is reconsidering its involvement in Facebook’s crypto project, following the severe backlash from the U.S. and European government officials. PayPal is reportedly worried about the scrutiny that the project is under right now, and is concerned that the social media giant behind the Libra hasn’t managed to adequately address several issues that the regulators have a brought up.
It doesn’t seem that there was a lot of pre-work done with regulators. [Payments] companies don’t want that [regulatory scrutiny] to bleed into their businesses.
A source revealed to the FYT that Project Libra is being led by David Marcus, an executive at Facebook and PayPal’s former president. If PayPal does pull out of project Libra, the legitimacy of the stable coin will take a serious blow as it might open the exit door for other member companies that are being double-minded or having doubts about Libra.
PayPal’s investor relations vice president, Gabrielle Rabinovitch, reportedly asserted that the company should reconsider their involvement in the Libra Association, as it is technically a “non-binding commitment”. However Rabinovitch didn’t really suggest that the payments company is looking to pull out but, at the same, she did mention that there is “a lot of work” that needs to be completed before Libra is anything more than “just a very exciting idea”
This isn’t the first time that a representative from one of Libra’s backing companies has brought up the “non-binding commitment” matter, implying that they still have a chance to abandon ship if things go south.
Earlier reports reveal that the CEO of Visa said that what his firm signed with Libra is a “non-binding letter of intent”, meaning, “no one has yet officially joined”. Even the head of this ambitious crypto project, Marcus has admitted and acknowledged that Libra partners reserve the right to pull their support.
PayPal isn’t the only Libra Association member to have cast a shadow of doubt on the future of the cryptocurrency, in fact, three of the Libra Association’s members have been considering leaving the consortium, including Mastercard and Visa. Very much like PayPal, it is highly likely that these companies are concerned that the regulatory backlash and scrutiny to Libra will eventually extend to their current businesses as well.
However, the Libra team is trying its best to remain resilient in the face of adversity. In his statement to the FYT, Dante Disparte, the Libra Association’s head of policy and communications shared that building a project like Libra “is not an easy path.” He further added:
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.
Reportedly there is another meeting scheduled in Geneva in the middle of October for everyone to formally voice their participation in the project. In the future, we will have a clearer picture of who’s onboard the Libra ship.