As we all know, PayPal has been very supportive – for the most part – of Libra, Facebook’s new cryptocurrency project, but the company was also among the first to exit the Libra Association. PayPal has remained relatively quiet regarding the details of its exit, but now chief executive Dan Schulman is sharing his thoughts on Libra and explains why his company refused to engage any further in the project’s progression.
Schulman: It Wasn’t Regulation that Spooked Us
Libra is arguably one of the most controversial cryptocurrency projects to ever exist. The coin is a network designed to assist people looking to purchase goods and services through Facebook, which has turned a lot of people off. Many are worried that a company with a relatively shady history (i.e. the Cambridge Analytica scandal) would have access to their financial information.
This has spawned many questions from lawmakers regarding how the cryptocurrency will work. Will it leave doors open for money laundering? How will it protect people? Who will be allowed to use it? Several questions have remained unanswered, though Facebook has pledged cooperation. Both David Marcus – the head of Facebook’s blockchain division – and Mark Zuckerberg, the founder of the company, have stood before Congress to give testimony regarding how Libra will work.
In addition, Zuckerberg has even said that his company will be forced to leave the Libra Association granted the project doesn’t have full regulatory approval by the time its ready to make its official debut.
In a recent interview, Schulman says that it wasn’t regulatory concerns that made PayPal leave the Association. He explains:
It wasn’t an acrimonious divorce or anything like that… [We] have an extremely robust relationship with every regulator out there. We are extremely trusted on that. That wasn’t really what spooked us on it.
He commented that PayPal is going to keep an eye on Libra’s operations and that it’s looking for other opportunities to potentially work with it in the future. He says that one of the big things that prompted PayPal’s exit was that he doesn’t think blockchain is appreciated or understood enough at this time, and thus blockchain-related business isn’t likely to garner much of a following. He also says that there isn’t anything crypto can do that traditional financial institutions can’t still do better.
Crypto Isn’t Strong Enough
On the crypto side, it’s still very volatile, and therefore, we don’t have much demand for it by merchants because merchants operate on very small margins… We think a lot of the neat stuff that can happen on blockchain is around identity.
Despite his negative words towards crypto, Schulman admitted in the interview that he does own some bitcoin and that PayPal is also working on its own crypto project, which is unnamed at the time of writing.