Tech

Tech Journalists, Experts Call PayPal’s Decision To Back Out Of Facebook’s Cryptocurrency Plan A ‘Blow’ To The Social Media Giant

Shutterstock/XanderSt

Daily Caller News Foundation logo
Font Size:
  • A number of tech experts are calling PayPal’s decision to back out of Facebook’s cryptocurrency plan a “blow” to the social media giant.
  • The decision came after other major companies like Visa and Mastercard were reportedly reconsidering their involvement in the program, according to The Wall Street Journal.
  • Libra was founded by former PayPal President David Marcus, who started working for Facebook in 2014.

Tech journalists and experts are calling PayPal’s Friday announcement that it will be backing out of Facebook’s plan to develop a cryptocurrency system a “blow” to the social media giant.

The online banking system was not a formal partner and the cryptocurrency program, Libra, has not officially launched; however, some reporters described its decision to withdraw from the plan as bad news for the social media site’s financial endeavors.

PayPal says it’s not going to be part of the Libra Association. Blow to Facebook, especially considering David Marcus, heading up Libra, used to be a PayPal exec,” Bloomberg tech reporter Sarah Frier tweeted Friday.

Fellow Bloomberg tech reporter Kurt Wagner also described the move as a “blow” to the tech giant, noting that Libra was founded by former PayPal President Marcus, who started working for Facebook in 2014 and began brainstorming for ways Facebook could launch a social media site blockchain initiative, according to The Wall Street Journal.

PayPal is officially out on Facebook’s Libra cryptocurrency project after signing on as an early partner. A particularly bad blow for Facebook given David Marcus, the guy leading Libra, used to work at PayPal,” Wagner wrote.

Digital Content Next CEO Jason Kint said he was surprised PayPal, Mastercard and Visa showed interest in the first place. (RELATED: Tim Cook Criticizes Facebook’s Cryptocurrency Plan: ‘A Private Company Shouldn’t … Gain Power This Way’)

“PayPal out. Previous reporting said Visa and Mastercard also reconsidering. I was really surprised they all jumped on this ‘trust ship’ together in [the] first place considering the investigations and obfuscations involving Facebook leadership on other matters,” he wrote in a Friday tweet.

Open Markets Institute fellow Matt Stoller tweeted the news of PayPal’s announcement and said Libra is “losing steam.”

The basic reason these corporations allowed Facebook to use their names on the Libra website was fear. They didn’t want to be left behind and didn’t want to offend [Facebook CEO Mark] Zuckerberg. Paypal breaking from the pack is thus meaningful,” Stoller added.

“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,” a PayPal spokesperson said in a statement.

“We remain supportive of Libra’s aspirations and look forward to continued dialogue on ways to work together in the future. Facebook has been a longstanding and valued strategic partner to PayPal, and we will continue to partner with and support Facebook in various capacities,” the spokesperson continued.

PayPal CEO Dan Schulman wrote in a since-deleted blog post in June that the payment company’s “expertise” could “not only contribute value to the Libra Association” but would also give PayPal “the opportunity to work with and learn from other leading organizations,” according to WSJ.

PayPal’s decision comes after WSJ reported in October that other major companies who signed on to partner with the Libra Association — a nonprofit entity made up of businesses to help operate Libra Blockchain — like Visa and Mastercard were reconsidering their involvement in the program amid backlash.

Head of Facebook’s Calibra David Marcus waits for the beginning of a hearing before Senate Banking, Housing and Urban Affairs Committee July 16, 2019 on Capitol Hill in Washington, DC. The committee held the hearing on "Examining Facebook's Proposed Digital Currency and Data Privacy Considerations." (Photo by Alex Wong/Getty Images)

Head of Facebook’s Calibra David Marcus waits for the beginning of a hearing before Senate Banking, Housing and Urban Affairs Committee July 16, 2019 on Capitol Hill in Washington, D.C. (Photo by Alex Wong/Getty Images)

The Libra Association has at least 28 partners including Facebook and Calibra, a regulated subsidiary that will allow users to send money to their contacts, even those who live in different countries, according to its website.

“It requires a certain boldness and fortitude to take on an endeavor as ambitious as Libra — a generational opportunity to get things right and improve financial inclusion. The journey will be long and challenging,” Libra Association Head of Policy and Communication Dante Disparte said in a statement.

“The type of change that will reconfigure the financial system to be tilted towards people, not the institutions serving them, will be hard,” Disparte added. “Commitment to that mission is more important to us than anything else. We’re better off knowing about this lack of commitment now, rather than later.”

Facebook will likely be challenged with state cryptocurrency regulations that have slowed the progress of other cryptocurrencies like Bitcoin.

The U.S. government has yet to regulate cryptocurrency because lawmakers have not determined whether it is a security or a commodity. Congress has, however, cracked down on Facebook for user privacy complaints. A combination of the two will be an effort neither Congress nor big tech has tackled before.

Content created by The Daily Caller News Foundation is available without charge to any eligible news publisher that can provide a large audience. For licensing opportunities of our original content, please contact licensing@dailycallernewsfoundation.org.