In a scathing statement, the Libra Association said goodbye and good riddance to PayPal after the payments firm withdrew from the group on October 4.
“It requires a certain boldness and fortitude to take on an endeavor as ambitious as Libra,” Dante Disparte, the association’s head of policy and communications, told Modern Consensus in an email.
Calling the project “a generational opportunity to get things right and improve financial inclusion,” he warned that, “[t]he journey will be long and challenging.”
Disparte added that “[c]ommitment to that mission is more important to us than anything else.”
That is why, he said, “[w]e’re better off knowing about this lack of commitment now, rather than later.”
The Libra Association was founded by Facebook. It has been trying to launch a stablecoin that would act as a global digital currency for anyone including the 2.7 billion users of its Messenger, WhatsApp, and Instagram products. Members of the Libra Association have committed to paying $10 million to buy in. That gets them an equal vote in the management of the cryptocurrency.
Facebook’s Calibra wallet division will be the social media giant’s voting member. That division’s president, David Marcus, is Facebook’s front man on the project. He is also a former president of PayPal.
Based on blockchain technology, the Libra coin is intended to be a digital currency backed by a basket of mixed fiat currencies, more than half of it the U.S. dollar. Libra Association members will also share in the interest earned by this bundle of cash.
The cryptocurrency plan has garnered a huge amount of criticism in the U.S., Europe, and farther afield. This is because of the private currency’s potential to be able to move global financial markets if it is widely adopted internationally. It is also because of Facebook’s atrocious reputation on protecting users’ data privacy.
Reports citing anonymous sources said on October 2 that Mastercard and Visa are also considering dropping out.
PayPal plays nice
“PayPal has made the decision to forgo further participation in the Libra Association at this time,” Amanda Miller, PayPal’s senior director, corporate communications, told Modern Consensus in an emailed statement.
Calling Facebook “a longstanding and valued strategic partner,” Miller’s statement also left the door open for PayPal to rejoin the group.
The company “remain[s] supportive of Libra’s aspirations and look[s] forward to continued dialogue on ways to work together in the future,” she noted.
She added that PayPal intends to continue focusing on its “existing mission” and will “strive to democratize access to financial services for underserved populations.”
Lofty public goals
That latter group is a key focus of the stablecoin, the Libra Association claims.
Libra is “[t]he type of change that will reconfigure the financial system to be tilted towards people, not the institutions serving them,” Disparte said.
“That is a journey, not a destination,” Disparte told Modern Consensus in an email before PayPal announced its withdrawal. “[E]ach organization that started this journey will have to make its own assessment of the risks and rewards of being committed to seeing through the change that Libra promises.”
He added that the association’s goal was nothing less than “[b]uilding a modern, low-friction, high-security payment network that can empower billions of financially underserved people.”
The third paragraph in the Libra whitepaper points to the unbanked poor as a key market.
Noting that high-tech communications are now accessible on a $40 smartphone, the whitepaper said, “[t]his connectivity has driven economic empowerment by enabling more people to access the financial ecosystem… Despite this progress, large swaths of the world’s population are still left behind—1.7 billion adults globally remain outside of the financial system with no access to a traditional bank, even though one billion have a mobile phone and nearly half a billion have internet access.”
This story was updated on October 4 at 7:50 p.m. to include the Libra Association’s response to PayPal’s withdrawal.