PayPal (PYPL) announced it is withdrawing from the consortium of companies supporting Facebook’s (FB) Libra cryptocurrency as other big-name backers like Visa (V) and Mastercard (MA) are getting cold feet. Facebook stock rose.
Facebook Libra was already suffering from weakening support in its consortium amid fierce blowback from regulators, sources told the Wall Street Journal earlier this week.
PayPal said Friday that while it is quitting the Libra Association it remains “supportive of Libra’s aspirations,” and that the firm will continue to work with Facebook in the future.
“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 democratize access to financial services for underserved populations,” the firm said in a statement.
Losing the backing of an industry giant like PayPal is a big blow to the Facebook project. Especially as the project is being led by David Marcus, a Facebook executive who previously served as PayPal’s president.
PayPal did leave some wiggle room in their statement that leaves the door open to them rejoining the project at a later date.
The firm said the social media giant “has been a longstanding and valued strategic partner to PayPal,” and that it will “continue to partner with and support Facebook in various capacities.”
Bitcoin Price, Bitcoin Stocks
Bitcoin turned lower, trading down 0.1% at $81.59. according to CoinDesk. The largest cryptocurrency has been struggling of late. However it has been regaining some ground after slipping below the $8,000 mark for the first time since June at the end of September.
Among other digital currencies, Ethereum was up 1.8%, Bitcoin Cash rose 2.5% and Ripple (also known as XRP) was flat.
Among Bitcoin- and blockchain-related stocks, Riot Blockchain (RIOT) closed up 2.4%. Overstock.com (OSTK) lost 1.3% and Grayscale Bitcoin Trust (GBTC) edged up 0.4%.
Lawmakers Skeptical Of Facebook Libra
Lawmakers have been strongly skeptical of the Facebook cryptocurrency project. In July Congress held cryptocurrency hearings focusing on Facebook Libra, with members of both parties criticizing the digital currency idea. That follows skeptical comments from President Donald Trump and Fed chief Jerome Powell.
And on Thursday, the Federal Reserve’s vice-chair for supervision, Randal Quarles, gave skeptical commentary on crypto at the European Banking Federation’s summit in Belgium.
“Although there is a small risk to financial stability today there is no doubt the potential scale of stablecoins and other cryptoassets yet to emerge may pose regulatory challenges,” he said.
The social media giant has been trying to reassure Congress that Facebook Libra will not launch until U.S. policymakers’ concerns are resolved.
On Sep.24, David Marcus, head of the Calibra digital wallet division head, told Congress that Facebook is committed to working with regulators and getting permission before launching.
“We want to get this right,” Marcus said in a letter to Rep. Emanuel Cleaver, D-Mo., a senior member of the House Financial Services Committee. “We will not launch until we have addressed all U.S. regulatory concerns.”
Facebook Stock Up
Facebook shares closed up 0.6% at 180.45 on the stock market today. However Facebook stock has fallen below sell zone after a breakout from a a cup-with-handle base on July 9 failed. The buy point was 198.58, according to MarketSmith analysis.
It is currently trading below its its 50-day line in recent sessions, though it has found support after falling to 200-day moving average. Facebook stock has an IBD Composite Rating of 69.
PayPal stock rose 1.7%. It has fallen below both its 50 and 200-day lines, which is a bearish indicator. However its Composite Rating of 88 is superior. Mastercard stock gained 2.2% and Visa stock added 1.8%.
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