Paypal Withdraws from Facebook’s Libra Association as Congress Puts Pressure on Zuckerberg to Testify

Online payments platform Paypal has withdrawn from the Libra Association, the governing body for Facebook’s cryptocurrency and blockchain Libra.

“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,” the company said in a statement to CNBC, adding that it was “supportive of Libra’s aspirations.”

Paypal’s withdrawal follows the publication of a report in the Financial Times which pointed out that the company was not represented at the association’s meeting Thursday held to discuss strategy for tackling growing regulatory opposition to Libra. The report further quoted an anonymous source as saying that the company’s concerns related to Facebook’s preparation in dealing with lawmakers.

“It doesn’t seem that there was a lot of pre-work done with regulators,” the source said. “[Payments] companies don’t want [regulatory scrutiny] to bleed into their businesses.” The source said Paypal may leave the association and rejoin at a later date.

Along with 26 other businesses, including payment processors MasterCard and Visa, Paypal had signed a Letter of Intent (LoI) committing to the Libra Association upon its launch. The association will be headquartered in Geneva and, in its current form, comprises a diverse mix of members, from payment processors MasterCard and Paypal to ridesharing companies Uber and Lyft and a smattering of nonprofits. It is responsible for overseeing governance for the blockchain and its crypto.

The FT report came after other stories which claimed that companies were apprehensive about joining the association because it would train regulatory spotlight on their businesses.

Paypal has been caught in regulatory crosshairs earlier. It paid a $7.7 million fine to the U.S. Treasury department in 2015 for processing questionable transactions to countries that were under sanctions.  

Meanwhile, U.S. regulators have stepped up the pressure on Libra. According to a report in online publication The Information, a House committee has invited Facebook COO Sheryl Sandberg to testify about its cryptocurrency on October 29 on the condition that CEO Mark Zuckerberg also appears before the committee before January 2020. The Information writes that the committee will also question Sandberg about Facebook’s advertising policies, which have come under a cloud in recent times. David Marcus, co-creator of Libra, appeared before Senate and Congressional representatives in July.