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PayPal was the only company noticeably absent at the recently held Libra Association meeting. The payment giant is reportedly planning to quit Facebook’s project to keep its hands clean of regulatory dirt.
Apart from its ongoing antitrust investigation as put forward by the Federal Trade Commission (FTC), Facebook is also having a rough time regarding its proposed digital currency, the Libra. A few months ago, Facebook announced its plans to float its own cryptocurrency and also released a whitepaper to the effect.
As part of the announcement, a Libra Association was announced, an association made up of several big companies including Uber, Mastercard, Visa, eBay, Spotify and many other heavy-hitters, which would be in charge of the Libra. Now, it would seem like all is not well in the Libra camp as PayPal, another founding member of the Libra Association might be abandoning the project.
Per a Financial Times report, a recent meeting of all of the 28 members of the association was held in Washington on Thursday. The meeting was called to iron out several issues the Libra is currently facing, most especially the problems surrounding regulatory support from relevant authorities. However, of all the 28 members, PayPal was conspicuously absent from the meeting.
Reportedly, PayPal is quite unhappy with the way Facebook has handled its regulatory issues and largely feels that the social media giant should be doing a lot more than it currently is, in that regard. Even though PayPal is yet to officially comment on this, the report quoted a source with some information about the situation, who mentioned that PayPal is unwilling to be caught up in any regulatory mess.
“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.”
As reported, PayPal might eventually pull out of the Libra Association in this initial stage, but might be open to returning at a later time when regulatory uncertainty has been largely clarified. Furthermore, another meeting to take place in Geneva has been set for sometime later this month.
At this meeting, members of the association are expected to formally confirm their interest in the Libra project. Membership of the association requires that each member commits $10 million towards the project. So far, money is yet to exchange hands.
PayPal’s exit, if it eventually does happen, would be a bit of a problem because apart from the fact that such a large payment company will be advantageous to the Libra in many ways, the current head of the Libra project, David Marcus, is PayPal’s former president.
Apparently, PayPal isn’t the only member of the Libra Association currently considering backing out of the deal. Because of all the flak and regulatory issues, Facebook is currently facing, other members like Mastercard, Visa and Stripe, are all seriously considering abandoning Facebook for pretty much the same reasons.
Generally, all of these traditional payment companies are very keen on maintaining a healthy relationship with regulatory bodies and are very unwilling to let anything dent the courteous relationship already established.