Paypal should be a well known partner on Facebook's planned cryptocurrency Libra. But now the online payment service has confirmed after the US market close on Friday that he leaves the project and gives up his stake. Previous rumors were already circulating about a withdrawal.
Facebook's digital currency is to be managed by the Libra Foundation based in Switzerland. There are, however, several concerns about the introduction.
Facebook had recently rejected reservations by overseers that Libra could intervene in the sovereignty of central banks. With the digital currency no new money is spent. However, some states, including the seven largest industrialized nations, fear that they might lose their monetary monopoly on private companies.
Facebook wants to introduce the digital currency according to planning so far in the coming year. Libra could act as a fast international transfer system. Politicians and regulators, however, also fear that the fund could lead to financial market disruptions given Facebook's huge user base.
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Whether the regulatory concerns are a reason for Paypal's exit is not known. The company only vaguely commented on the motives. One wants to focus on the past tasks and business priorities, it said in a message only. Paypal stressed, however, Libra despite the exit want to continue to support "supportive".
Other partners are apparently reconsidering their involvement
After the Paypal exit, the Libra Foundation stated that all parties involved had to balance the risks and benefits of participating in the digital currency. It would be better to learn about a lack of engagement now than later, a spokesman told the Wall Street Journal.
Facebook had presented at the presentation in the summer well over two dozen well-known partners. According to the US media, Visa, Mastercard and Stripe are reconsidering their participation in Libra because of the strong political resistance. First official members are to be named in the coming weeks.