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PayPal bails on Facebook-led Libra cryptocurrency dream

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PayPal's decision to bail is notable because David Marcus, the Facebook executive leading the Libra initiative, used to be president of PayPal.

New York

PAYPAL Holdings Inc pulled out of the Libra Association, a blow to Facebook Inc's efforts to develop a digital currency.

"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 underserved populations," the payments company said in a statement e-mailed to Bloomberg News on Friday. A Facebook spokeswoman declined to comment.

Several founding members of the Facebook-led project have been wavering over whether to fully embrace the effort because they are concerned about maintaining positive relationships with regulators who have reservations about the initiative, people familiar with the matter told Bloomberg earlier last week.

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Concerns that PayPal might back away from the project intensified on Thursday when the company was mysteriously absent from a meeting of Association members in Washington. All of the other original partners were in attendance, according to people familiar with the situation who asked not to be identified discussing a private meeting.

PayPal's decision to bail is notable because David Marcus, the Facebook executive leading the initiative, used to be president of PayPal. Facebook's blockchain team also has many former PayPal employees.

The Libra Association, the group of companies Facebook has assembled to oversee the cryptocurrency, has 28 founding members. The organisation has asked these members to reaffirm their commitment to the project later this month. Before Libra was unveiled, the companies signed non-binding letters of intent to explore joining the association.

Dante Disparte, head of policy and communications for the Libra Association, confirmed PayPal's decision, and said the first Libra Council meeting will take place on Oct 14.

"This journey to build a generational payment network like the Libra project is not an easy path," he added in a statement. "We recognise that change is hard, and that each organisation 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."

Mr Disparte also noted that 1,500 "entities" have indicated "enthusiastic interest" in being part of the association. Some of those entities already have contracts in the works to join Libra, according to people familiar with the matter, though they will have to wait until original partners sign the official charter later this month.

"We remain supportive of Libra's aspirations and look forward to continued dialogue on ways to work together in the future," PayPal said on Friday. "Facebook has been a longstanding and valued strategic partner to PayPal, and we will continue to partner with and support Facebook in various capacities." BLOOMBERG