PayPal is pulling out of Facebook’s digital currency project, known as Libra, a blow to the social media company that has faced stronger-than-expected scrutiny over its proposed creation of an alternative payments system.
The digital payments company said on Friday that it is withdrawing from the Libra Association and would focus on its existing businesses.
Facebook has presented Libra as a currency that could be used for digital payments, particularly outside the United States. It would be backed by real currency, unlike other digital currencies like Bitcoin or Etherium.
But financial regulators as well as members of Congress have questioned Facebook’s motives at creating a new digital currency, particularly in light of criticisms that Facebook’s business model is too invasive into its users’ privacy.
PayPal’s announcement followed a new report earlier last week that partners in Facebook’s cryptocurrency-based payments network were wavering in their support amid a backlash from US and European officials.
The Wall Street Journal reported on Tuesday that Visa Inc, Mastercard Inc and others that signed on to help build Libra were reconsidering their involvement. The newspaper cited people familiar with the matter who were granted anonymity.
Mastercard had no comment. Facebook and Visa did not immediately respond to messages seeking comment. Facebook has faced regulatory push-back over Libra since unveiling it in June. The idea is to open online purchasing to millions of people who do not have access to bank accounts and reduce the cost of sending money across borders.
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