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PayPal, who was one of 28 corporate backers of the project, is withdrawing from Facebook’s Libra Association, the company announced Friday, as the libra cryptocurrency continues to face harsh criticism from lawmakers and entrepreneurs.
PayPal, whose former president David Marcus leads the Libra project, said it is still “supportive of Libra’s aspirations” and that it will continue to partner with Facebook in the future, yet will not be participating in the cryptocurrency’s future development.
“PayPal has made the decision 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,” PayPal said in a statement.
“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,” Dante Disparte, head of policy and communications for the Libra Association, said in an emailed statement.
Hours before Paypal’s announcement, Apple CEO Tim Cook spoke with the French newspaper Les Echos, characterizing Facebook’s plans to launch a cryptocurrency as a blatant power grab while shutting down any notion that Apple might be considering launching a digital currency of its own.
“No. I really think that a currency should stay in the hands of countries. I’m not comfortable with the idea of a private group setting up a competing currency,” Cook told the publication in an interview published today. “A private company shouldn’t be looking to gain power this way.”
Before PayPal’s withdrawal, the Libra Association had been made up of 28 corporate backers, including Facebook, who are meant to help govern libra. All founding members were expected to invest a minimum of $10 million to fund the operating costs of the association and launch an incentive program to drive adoption, according to Facebook’s initial announcement of the project, but those investments have not yet been made.
Facebook’s involvement caught the attention of senior congressional finance committee members, global regulators, former lawmakers and industry insiders who questioned the social media company’s motives. Federal Reserve Chairman Jerome Powell said this summer that libra raises “serious concerns regarding privacy, money laundering, consumer protection, financial stability.” Rep. Maxine Waters, chairwoman of the House Financial Services Committee, told CNBC in June that “it’s very important for them to stop right now what they’re doing so that we can get a handle on this,” while also indicating that Congress would “move aggressively” to deal with it.
Lawmakers in the House Financial Services Committee are seeking to bring Facebook’s top executives to testify on libra before the committee, CNBC reported Friday. Two sources familiar with the situation told CNBC that the committee has been in talks with Facebook about bringing COO Sheryl Sandberg to testify this month, but that the hearing would be contingent on CEO Mark Zuckerberg’s agreement to appear before the committee.