PayPal has become the first company to walk out officially from the group of organizations that Facebook assembled in a bid to launch the Libra cryptocurrency payment network.
PayPal Drops Out Of Libra Project
The online payments company has revealed that it will forgo further participation in the Libra Association, becoming the first of the 28 founding members to depart from the project.
PayPal made the announcement just four months after it was revealed it is one of the organizations to back up the Libra cryptocurrency.
It also came after earlier reports claimed that Visa, Mastercard, and other financial partners, which agreed to be part of the Libra project, are considering their involvement following a backlash from government officials in Europe and the United States.
There were concerns about how Facebook and the companies involved would protect the privacy of the users and prevent criminals and terrorists from using the cryptocurrency to launder money.
Big Blow To Facebook's Plans
PayPal's decision to back out of the association is a strong blow to Facebook's ambition to transform financial services given the strong ties between the two companies.
Libra is the brainchild of David Marcus, who is now head of Facebook's cryptocurrency unit. He used to be the president of Paypal before joining Facebook in 2014 to lead the social media company's Messenger's division.
Commenting on the recent development, Rep. Sylvia Garcia, D-Texas, who is a member of the House Financial Services Committee, said that Paypal's decision to walk away from the project is an indication that something is amiss.
PayPal, however, said that it remains supportive of Libra's mission and will continue to work with the company.
"We remain supportive of Libra's aspirations and look forward to continued dialogue on ways to work together in the future," a Paypal spokesperson said, as quoted by The Telegraph.
"Facebook has been a longstanding and valued strategic partner to PayPal, and we will continue to partner with and support Facebook in various capacities."