PayPal’s Libra exit adds to Facebook’s woes

SAN FRANCISCO: PayPal on Friday said that it had pulled out of the coalition of companies involved in a Facebook-backed cryptocurrency initiative, in the latest headache for the social network’s effort. The proposed cryptocurrency, Libra, has been in the works at Facebook for more than a year and was announced to much fanfare in June.

Libra was designed to function as a cryptocurrency that could be freely traded inside Facebook’s properties, like Messenger and WhatsApp, and would be used for international exchange. At the time, Facebook said more than 27 corporate partners — including Visa, Mastercard and companies like Uber — had pledged to support the project.

“Pay-Pal 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,” a spokeswoman for PayPal, Amanda Coffee, wrote in an email. A Facebook spokeswoman did not respond to a request for comment.

PayPal’s decision is a blow to Facebook and its cryptocurrency ambitions, which are based on the premise that Libra will be controlled not by Facebook but by a broad network of corporate partners. The effort is the most far-reaching attempt by a mainstream company into the world of cryptocurrency, with Facebook executives having detailed plans for how Libra could become the foundation for a new financial system not controlled by today’s power brokers on Wall Street or central banks.

“It feels like it is time for a better system,” David Marcus, head of Facebook’s blockchain technology research, said in June. “This is something that could be a profound change for the entire world.” Yet the project encountered pitfalls almost immediately after it was announced.

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