PayPal backs out of Facebook's Libra amid backlash from U.S. and European government officials

Facebook's cryptocurrency project Libra. Photo: Fabrice Coffrini/AFP/Getty Images

PayPal dropped out of Facebook's digital currency project Libra on Friday, the Wall Street Journal reports.

Why it matters: Facebook’s cryptocurrency plans have come under scrutiny from regulators across the globe. Now, some of its provisional partners appear to be having second thoughts.

---

Background: Earlier this week, the Wall Street Journal reported that Visa, MasterCard and others were reconsidering their positions in Libra, but Facebook still plans to forge ahead.

• Representatives from the companies are scheduled to meet in Geneva on Oct. 14 to review a charter for a group called the Libra Association, a collection of more than 2 dozen backers, and appoint a board of directors.

The impact per WSJ: "Without a network of financial partners that could help transfer currencies into Libra and global retailers to accept it as a form of payment, Libra’s reach would be limited."

What they're saying:

David Marcus, Facebook executive leading the Libra effort and former president of PayPal, defended the cryptocurrency-based payments network on Wednesday in a Twitter thread, calling WSJ's initial reporting "BS":

"The tone of some of this reporting suggests angst, etc... I can tell you that we're very calmly, and confidently working through the legitimate concerns that Libra has raised by bringing conversations about the value of digital currencies to the forefront."

Dante Disparte, head of policy and communications for the Libra Association:

"We recognize that change is hard, and that each organization that started this journey will have to make its own assessment of risks and rewards of being committed to seeing through the change that Libra promises."

PayPal: "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."

Go deeper: Facebook spoils the cryptocurrency party