Payments company PayPal has announced that it is pulling out of Libra Association, an alliance for the launch of Facebook cryptocurrency Libra.
PayPal has released a statement saying that it is leaving the alliance with Facebook for its Libra cryptocurrency but did not specify the reason behind the decision. Facebook unveiled Libra and its digital wallet Calibra in June.
The digital currency has received criticism from regulators and France and Germany have expressed that they will prevent its use in Europe.
In the statement, Paypal said that it "[remained] supportive of Libra's aspirations" but had chosen to focus on its own core businesses. Paypal was one of the original members of the Libra Association, a group of 28 companies and non-profits cooperating to develop Libra, which also include payments company Visa, ride-hailing app Uber and humanitarian charity Mercy Corps.
Following Paypal’s announcement of its withdrawal, Libra Association released a statement saying it was aware that trying to "reconfigure the financial system" would be difficult. However, it claimed: "Commitment to that mission is more important to us than anything else. We're better off knowing about this lack of commitment now."
At the unveiling of Libra, Facebook said that using the currency would enable people to make payments via its own apps, as well as on messaging service WhatsApp. Libra transactions will also be accepted by its partner companies.
While Facebook assured that Libra would be independently-managed and backed by real assets, and that the payment process would be easy, regulators have expressed concerns about how people's money and data will be protected, as well as the potential volatility of the currency.
The Group of Seven advanced economies issued a warning in July that it would not allow Libra to proceed until all regulatory issues had been settled. The Libra Council, the association’s governing body, will hold its first meeting on October 14.
