Possible reasons why PayPal dropped Facebook’s Libra membership
PayPal withdraws its application from Facebook’s Libra association, a group of members to oversee the governance of Libra network. Since the announcement of Facebook’s Libra project, policymakers around the world have backlash the project claiming that it could risk destabilizing the monetary system.
Addressing the rumors, a PayPal spokesperson said that they remain supportive of Libra’s aspirations but had chosen to focus on its own core businesses. So what exactly is this ‘core business’ which made PayPal withdraw its application? So where are they busy?
PayPal seeks China market entry
Just last week, PayPal Holdings Inc. obtained approval from Chinese regulators to purchase a majority stake of a local payment processing firm, GoPay Information Technology. As a result of this acquisition, it would make PayPal the first foreign company to make an entrance into China’s payment services market.
This is one of the major developments for PayPal and understandably requires attention to integrate GoPay business unit with PayPal.
PayPal Payment platform potentially used by child exploitation rings
Another possible explanation could be due to wide attention Facebook’s Libra project has gather. Since the launch, governments and regulators around the world have backlashed the initiative and calling for a halt until all regulatory concerns have been addressed.
PayPal may be concerned that by formally signing membership in Facebook’s Libra association may put them into the regulatory spotlight. So why PayPal does n’t want that.
Apparently there are claims that PayPal’s payment platform is used for money laundering. The firm is undergoing investigation by AUSTRAC for its fund transfer platform used by child exploitation rings in Asia. Source: ABC.Net.AU
Where Libra goes from here?
According to Dante Disparte, Libra’s head of policy and communications, 1500 entities have indicated interest to join as a node operator. This gives Libra plenty of options. Libra uses the BFT consensus mechanism which slows down the network as the count of nodes increases. Therefore, expect Libra to be maintained within the closed-circuit of 100 nodes.
Definitely losing PayPal is a big blow for the Libra, however, do expect them to return and solidify the partnership. Libra is led by former PayPal executive David Marcus and most of the project’s team contains former PayPal staff. Unlikely for this team to drop off here.
