Is Libra Doomed? PayPal Pulls Out Of Plans For Facebook Cryptocurrency

PayPal officially pulled out of the Libra Association Friday, dealing a blow to Facebook’s plan to launch a cryptocurrency for the masses next year.

“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 democratize access to financial services for underserved populations,” the payments company said in a statement, adding that it remained supportive of the idea.

Visa, Mastercard and Stripe also are reported losing interest in the project, wary of attracting regulatory scrutiny.

Facebook, with more than 2.4 billion active users, wants to make Libra the internet currency used for most digital transactions.

It initially assembled a group of 28 founding members for the project but since its announcement earlier this year, regulators have raised questions over whether the cryptocurrency could facilitate money laundering and run into opposition from countries like France, which vowed to prevent Libra from developing in Europe, calling it a threat to fiat currencies.

Libra would differ from other cryptocurrencies in that it is designed to be less volatile, with the value tied to a basket of fiat currencies.

David Marcus, the former PayPal president who is leading Libra’s development, has tried to allay fears of regulatory opposition saying developers are working to address legitimate concerns.

CNBC reported Friday the U.S. House Financial Services Committee wants Facebook executives, including CEO Mark Zuckerberg and Chief Operating Officer Sheryl Sandberg, to return to Capital Hill to testify about plans for the cryptocurrency. Rep. Sylvia Garcia, D-Texas, said it’s critical that Zuckerberg address concerns.

“After the last hearing my colleagues and I were left with more questions than answers,” Rep. Lance Gooden, R-Texas, told CNBC in an email. “If Facebook shares our commitment to transparency for the American people, then I hope Mr. Zuckerberg will share his testimony before the committee.”

Each of the Libra Association members was to put up $10 million to participate in the project, aimed at shaking up the global payments system. Participation has yet to be formalized though a meeting is set for Geneva next week to finalize the structure.