PayPal becomes first company to drop out of Facebook's Libra cryptocurrency

PayPal has become the first company to officially quit Facebook’s Libra cryptocurrency, just four months after being announced as one of its founding members.

The online payments company announced last night that it would “forgo further participation” in the Libra Association, a group of 28 organisations supporting the currency.

The news is a major blow to Facebook boss Mark Zuckerberg’s plans to launch its own international currency, an initiative that has been met with widespread scepticism from politicians and central banks.

Facebook had sought to position the association as a collective effort in order to defuse claims that it amounted to a power grab by the social network. However, other members of the Libra Association, including Visa and Mastercard, have been reluctant to publicly endorse the project in recent weeks.

PayPal’s move now risks opening the floodgates for other members of the association, a group of payments and cryptocurrency firms, telecoms operators and non-profits, to distance themselves from the project.

The company’s loss is a particular blow to Facebook because of the strong links between the two companies. David Marcus, the head of Facebook’s cryptocurrency unit, once ran PayPal and the company handles payments on Facebook.

“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 democratise access to financial services for underserved populations,” a spokesperson said.

“We remain supportive of Libra’s aspirations and look forward to continued dialogue on ways to work together in the future. Facebook has been a longstanding and valued strategic partner to PayPal, and we will continue to partner with and support Facebook in various capacities.”

Facebook unveiled Libra, a digital currency that it said would make it easier to send money across borders and between people, in June. The Libra Association behind it says it wants the currency to be available in the first half of next year, but US politicians have urged Facebook to put the project on hold. Bank of England Governor Mark Carney has called for the currency to be rigorously scrutinised before it is allowed to launch.

Mr Marcus said earlier this week that the first group of companies in the Libra Association would be formalised in the coming weeks.