PayPal is first member to drop out of Facebook’s Libra cryptocurrency

PayPal announced this Friday that it would be pulling out of the Facebook led alliance that is trying to launch the cryptocurrency/digital currency Libra. This marks PayPal as the first member who has left. The exit comes as a surprising blow as PayPal was one of the initial members of the association, which now only counts 27 companies among its members.

PayPal has not given an official and reason for the exit, but only a broad and non-descriptive statement to the Verge.

to forgo further participation in the Libra Association at this time and to continue to focus on advancing our existing mission and business priorities as we strive to democratize access to financial services for underserved populations.

Statement from Libra to The Verge

However, an article from the Financial Times indicate that among the key reasons for PayPal pulling out was the regulatory issues and scrutiny that have seemed to plague Libra from the start. Regulators in both Germany and France have pledge to block access its access to Europe, along with US Head of Treasury Mnuchin publicly stating that it could be used by money launderers and to fund terrorism.

There have been no direct response to PayPal’s exit from Libra except a series of tweets, which only partially alluded to it.

The exit comes only 10 days ahead of Libra’s first council meeting where they will be sharing updates and more details on the 1,500 entities that have expressed an interest in Libra.

Libra and its associated wallet Calibra was formally announced by Facebook in June 2019 and scheduled to have its first version up and running in 2020. The Libra organisation aims at creating something akin to a stablecoin, which is a cryptocurrency that seeks to either peg its value to a real world asset or to try and minimize price fluctuations. However, Libra differs compared to most other cryptcurrencies as it does not use a decentralized permission-less blockchain to settle transactions. Libra instead relies on trust in the Libra Association which acts as a central bank.

The now 27 members includes a range of firms from a wide set of industries payments (e.g. Mastercard), technology (e.g. eBay), telecom (e.g. Vodafone), blockchain (e.g. Coinbase), venture capital (e.g. Andreesen Horowitz) and several nonprofits (e.g. Women’s World Banking)