The Libra Association would not quite deny reports that digital payment service PayPal is withdrawing from the group, designed to oversee Facebook’s highly controversial, proposed cryptocurrency.
Calling the report “speculative,” Dante Disparte, head of policy and communications for the association, spoke only in generalities about how difficult it is to turn something like the Libra digital currency into a reality.
“Building a modern, low-friction, high-security payment network that can empower billions of financially underserved people is a journey, not a destination,” Disparte told Modern Consensus in an email. “This journey to build a generational payment network like the Libra project is not an easy path.”
On October 4, the Financial Times [subscription required] reported that PayPal had skipped a Libra Association meeting in Washington, D.C. a day earlier, and had decided to pull out.
PayPal did not respond to Modern Consensus’ request for comment by press time.
The Libra Association, which currently has 28 members, is designed to insulate Facebook from concerns that it will control the Libra cryptocurrency. Facebook’s Messenger, WhatsApp, and Instagram messaging services would give Libra an instant audience of 2.7 billion members.
That has both angered and scared regulators and politicians around the world.
Disparte was equally vague in answering a direct question about PayPal pulling out.
“We recognize that change is hard, and that each organization 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,” said Disparte in his email.
Pointing out that the Libra Association members had not even gathered formally yet, he added that the association “look[s] look forward to the first Libra Council meeting” on October 15.
The association will share updates after that, Disparte promised.
As Modern Consensus reported on October 2, PayPal is not the only major financial services firm reportedly considering pulling out of the Libra Association. The Wall Street Journal cited anonymous sources saying that Mastercard and Visa—easily the largest and most recognizable members after Facebook—were considering leaving the Libra Association.
The same day as those reports, a conveniently timed leak of a private meeting offered a recording of Zuckerberg telling employees that Facebook was going to have to change its “move fast and break things” culture.
“[W]hat we’re trying to do overall on these big projects now that touch very socially important aspects of society is have a more consultative approach,” Zuckerberg said in two July meetings. “[T]his is going to be a long road. We kind of expected this—that this is what big engagement looks like.”
Libra has come under attack from President Donald Trump and members of the House and Senate’s banking and finance committees, as well as a plethora of leading EU regulators and politicians. A number of major international financial organizations like the World Bank also expressed serious concerns.
More than a few of those representatives, including those from France and Germany, have proposed banning outright. The latest American elected official was Rep. Al Green (D-Texas), who in late September proposed making it a security. That would effectively kill Libra.
Their main concern is that with an audience as large as Facebook’s global user base, Libra could both affect global financial markets and challenge the power of fiat currencies, including the dollar and euro.
Facebook’s terrible record on protecting consumer privacy—the U.S. Federal Trade Commission just fined it $5 billion—and its use in the 2016 U.S. election tampering scandals are also big concerns. That said, more than a few financial leaders have suggested that central bank-issued digital currencies are inevitable. China is close to launching one, although likely not in November as recent reports indicated.
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