By Facebook’s plan to launch its new digital currency Libra faces a blow after PayPal denounced its support on Friday.
The payment firm released a statement saying that it has decided to forgo its 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”.
PayPal has, however, maintained that it would continue to support Libra association through continued dialogue in the future. The statement from Paypal said;
“Facebook has been a longstanding and valued strategic partner to PayPal, and we will continue to partner with and support Facebook in various capacities.” the statement continued. Despite the blow, facebook is still committed to building “a generational payment network.”
Purpose of Paypal in the Venture
The social media giant joined the Libra Association, which is now a 27-member nonprofit organization, in its ambition to launch a new digital currency next year. It unveiled the new digital currency Libra in June. Facebook explained that it would work with 27 launch partners to implement the governance of the Libra token, using its partner Libra Investment Token as a voting tool. The Libra association has scheduled a meeting on October 14 to sign a charter formally creating this governing council.
All founding members were expected to invest at least $10 million to fund the operating costs of the association and launch an incentive program to drive adoption, according to Facebook’s initial announcement of the project, but those investments are yet to be made.
Facebook’s decision to venture into the digital world has met widespread criticism from lawmakers from different countries, citing that facebook might run the risk of destabilizing global monetary order. They argue that Facebook and its partners are trying to make an end-run around existing financial services and their corresponding regulations.
Dante Disparte, head of policy and communications for the Libra Association, said in an emailed statement, “We recognize that change is hard and that each organization that started this journey will have to make its assessment of risks and rewards of being committed to seeing through the change that Libra promises.”
PayPal became the first of the 28 partners to drop out of the Libra project. Master cards, visas, and other official partners are reconsidering their involvement in the network according to media reports.
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