Facebook’s new cryptocurrency is having a hard time on multiple fronts. The US government has already been scrutinizing the business’ activities under suspicion of evading anti-trust legislation. Now, PayPal, one of the major companies involved in the Libra Consortium, which will control and standardize the cryptocurrency being spearheaded by Facebook, has decided to back out. Losing the backing of such a significant financial organization may be a severe setback to the final adoption of the cryptocurrency.
Libra Losing Steam Rapidly
After being announced earlier this year, with supporting partners within the financial sector like Visa, Mastercard, and PayPal, the crypto coin looked destined for greatness. Now, after PayPal withdrew from the discussion about implementing the currency, Visa and Mastercard are also contemplating their involvement as well. Facebook’s obfuscations regarding the use of user data as well as their abysmal record when it comes to ensuring data security may play a part in the companies’ decision to partner with the social media giant.
While PayPal noted that they aren’t interested in continuing discussions about Libra at current, they didn’t rule out their partnership with Facebook either. Amidst backlash from the European Union, several of the companies that signed on to the Libra Consortium are now considering their role and the profitability of the coin, should it be launched. The loss of PayPal as a partner is telling, however. The payment processor was one of the most critical contributors thanks to their reputation within the financial sector. If both Visa and Mastercard pull out of the agreement, it would mean that consumers would lose the experience of these companies as well, resulting in a further loss of confidence in the coin.
Cryptocurrency Regulation Forthcoming?
While the US has yet to put legislation in place to regulate cryptocurrencies, other states such as the EU already have laws in place to deal with blockchain-based distributed currencies. Recently, within the US, Wyoming passed a series of legislation that made it easier for cryptocurrency companies to set up within the state. If federal law goes against this trend, it’s unclear whether Libra will have a future at all.