PayPal Withdraws From Libra Association
Facebook’s Libra Association is down from 28 international members to 27. This following PayPal’s recent announcement that it had decided to withdraw from the social media giant’s cryptocurrency association because of the fact that wants to instead focus on developing its own core business strategy. PayPal did however ad that it would be open to ongoing future conversations about possible joint ventures or involvement and that it fully supported Libra’s aspirations.
PayPal’s decision to withdraw at this stage of the very early development stage isn’t exactly something that can be blown off as just another change of plan in the general swing of business. And judging by the fact that both MasterCard as well as Visa are reportedly considering leaving Libra’s party too, there definitely is more to PayPal’s sudden withdrawal than what the international payment provider has elected to reveal.
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The Wall Street Journal last week ran a number of reports on Libra and its founding members, the majority of which were either positive or neutral-informative. But one of the reports did not paint a pretty picture at all. According to a memo received by The Wall Street Journal, the two financial super-institutions are considering taking a step back because of concerns relating to especially money laundering, among various other issues.
More clarity on the matter should be had after Libra Association’s Geneva charter review meeting come October 14th. A board of directors will supposedly also be appointed on the mentioned date. The possible withdrawal of MasterCard and Visa is no doubt a major headache for the social media giant as without global network partners able to facilitate the transfer of standard currencies into Libra, the cryptocurrency’s overall reach will be significantly limited; even to the point of being declared non-viable.
The Policy Rat In The Water
MasterCard and Visa’s decision to review follows various concerns raised by US and European government and judicial officials over the practical implementation of a cryptocurrency without opening a giant money laundering black hole; which once open, will be very hard to close or contain.
PayPal quite obviously doesn’t consider the inevitable heading into a right regulatory storm to be worth the pressure on its resources and reputation. According to The Wall Street Journal report, the United States Treasury Department not too long ago addressed letters of concern and requests for information to PayPal Holdings Inc., MasterCard, Visa and Stripe Inc. The department requested that the recipients furnish it with a detailed overview of their (the four aforementioned companies) money-laundering compliance policies as well as a proper explanation of how and to what extent Libra will “fit” into those policies.