As part of its project, Libra will be overseen by a governing council of 100 members, including Facebook and its subsidiary Calibra. PayPal, Visa, Mastercard, Uber and 22 other prominent payments and services firms were listed as founding members of the council, dubbed the Libra Association.
One of the founding Libra Association members may be on the verge of pulling out.
The Financial Times reported Thursday that payments firm PayPal is considering leaving the Facebook-initiated crypto project due in part to the regulatory backlash Libra has received in recent months.
According to the Financial Times, PayPal representatives did not attend a Libra Association meeting on Thursday, in what may be a sign of the broader turmoil.
Facebook first revealed Libra in June, unveiling a grand ambition of providing financial services to more than a billion unbanked individuals through a stablecoin accessible by any smartphone.
Dante Disparte, the Libra Association’s head of policy and communications, told the FT that building a project like Libra “is not an easy path.”
“We recognise that change is hard, and that each organisation 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”, he said.
Thursday’s revelation follows a Wall Street Journal report that Visa and Mastercard are also considering withdrawing from the project. Like PayPal, it is possible that these companies are concerned that the regulatory backlash and scrutiny to Libra will extend to their current businesses as well.
Calibra CEO David Marcus, himself the former president of PayPal, addressed the Journal’s report on Twitter, writing that he had “no knowledge of specific organizations’ plans to not step up.”
“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.”
Payments Unicorn Square Gets Limited Bank Charter for Merchant Lending
Square is launching a bank in 2021.
On Wednesday, the U.S. Federal Deposit Insurance Corporation Board (FDIC) gave the payments startup conditional approval for a bank charter to launch Square Financial Services, an Industrial Loan Company. Headquartered in Salt Lake City, Utah, the bank also received approval from The Utah Department of Financial institutions for the charter.
The bank’s primary business will be deposit products and small business loans for its commercial lending business. It plans to continue its business of selling loans to third party investors, and Square doesn’t expect the bank to have a “material impact on Square’s consolidated balance sheet in 2020.”
Square is led by bitcoin advocate and Silicon Valley mogul Jack Dorsey. Profits related to bitcoin made up half of Square’s Cash App revenue in the fourth quarter 2019, and the company is active in the crypto venture capital space, most recently funding Transparent Financial Systems, a startup developing a real-time “cryptographic settlement” network. But the bank has no plans to offer any features related to cryptocurrency, a Square spokesperson said.
Square’s banking services lead Lewis Goodwin will be the bank’s chief executive and the company’s finance lead will be its chief financial officer. Goodwin was previously president and CEO of Green Dot Bank, and has held senior banking roles at Toyota Savings Bank, Chrysler Financial Bank, and West One Bank. Soto was CFO at Green Dot Bank and held senior roles at Sallie Mae Bank, Chrysler Financial, Toyota Savings, Allegiance Direct Bank, and JP Morgan Chase.