Facebook’s proposed cryptocurrency Libra has had its fair share of scrutiny and regulatory issues, and now the Financial Times is reporting that PayPal is very close to leaving the 28-company coalition meant to help Libra gain legitimacy and come to fruition.
Representatives from all 28 Libra backers were set to meet in Washington on Thursday (Oct. 3) to discuss how to handle the backlash and move forward; all were present except for PayPal.
If PayPal leaves, it would be a blow to the proposed stablecoin and its legitimacy. The Libra effort is being led by David Marcus, an executive at Facebook and PayPal’s former president. The payments company is reportedly worried about all of the scrutiny and concerned that Facebook has not adequately addressed the issue of money laundering.
“It doesn’t seem that there was a lot of pre-work done with regulators,” the source of the information told the times. “[Payments] companies don’t want that [regulatory scrutiny] to bleed into their businesses.”
The source said PayPal might rejoin at a later date, but will likely not be part of Libra initially. Members of the Libra Association have said they would each put $10 million toward the project, although they have also voiced concerns. No companies have yet paid the money.
A meeting is scheduled in Geneva in the middle of October for everyone to formally voice their participation in the project. Facebook is hoping the project will revolutionize the finance industry and give access to people who are usually not able to participate.
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Regulators are concerned the currency could destabilize the current financial market, as well as provide criminals with an easy way to move illicit money.
The currency has been criticized by regulators around the world. Two countries in the EU, France and Germany, have pledged to block it.
