PayPal abandons Facebook Libra cryptocurrency even before its launch

Pioneering digital payments firm PayPal has said it will no longer be part of an alliance intended to oversee the Facebook-backed Libra cryptocurrency, which has come under attack by regulators.

"PayPal has made the decision to forgo further participation in the Libra Association at this time," the California-based company said on Friday.

"We remain supportive of Libra's aspirations and look forward to continued dialogue on ways to work together in the future." 

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PayPal abandons Libra

International outcry is mounting over Libra -- with central banks, governments and regulators railing against Facebook's upstart cryptocurrency and questions over how it would be regulated. The social media giant unveiled plans in June for Libra -- which will roll out in 2020 -- to be backed by a basket of currency assets to avoid the wild swings of Bitcoin and other virtual units. The nonprofit Libra Association, based in Geneva, will oversee the blockchain-based coin, maintaining a real-world asset reserve to keep its value stable. Facebook envisioned Libra as a new global cryptocurrency, pledging to deliver a stable virtual money that lives on smartphones and could bring over a billion "unbanked" people into the financial system. Hundreds of billions of dollars are transferred annually between migrants to friends and family in their home countries, and PayPal is a player in that sector.

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'Not a member of anything'

Mastercard, Visa and other financial partners enlisted to oversee Facebook-backed cryptocurrency Libra are reported to be having second thoughts as regulators unleash ire on the project and dig for information from members of the association. Visa chief executive Alfred Kelly in an interview in August with CNBC said the company had signed a non-binding letter of intent with the association but was "not a member of anything." Kelly went on to say Visa would not join the association if it isn't satisfied when it comes to complying with regulations.  The head of the Libra Association said last week that the project's leaders aimed to "reassure" regulators worried about the virtual money.  Besides Facebook, Visa and MasterCard, backers of Libra include ride-hailing apps Lyft and Uber.

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In leaked comments from a meeting of Facebook employees in July, Facebook chief executive Mark Zuckerberg said he remained optimistic for Libra despite harsh comments from public officials in several countries. 

"The public things, I think, tend to be a little more dramatic," he said. 

"But a bigger part of it is private engagement with regulators around the world, and those, I think, often, are more substantive and less dramatic... That's where a lot of the discussions and details get hashed out on things."

(AFP)

Picture: AP