PayPal announced that it is quitting Facebook's Libra currency, becoming the only Libra backer to skip the association's recent meeting before walking away entirely.

The day before, reporting indicated that PayPal did not show up to the Libra Association's meeting about regulatory pressure. Twenty-eight backers of Libra were supposed to meet in Washington to discuss future plans for the currency, but only twenty-seven showed up.

How we got here

An interesting fact about the PayPal–Facebook relationship is that David Marcus, the executive in charge of Libra, used to be PayPal's president. During Facebook's congressional hearings, one of the main points of contention was that the coin amounted to very powerful companies making a currency under the guise of crypto.

In reality, Libra was quite the opposite of decentralized, which gave it very little credibility in the crypto space. Mainstream consumers less familiar with blockchain still tended to consider it a cryptocurrency, but many others did not.

Even with the government and crypto advocates second-guessing Libra at every step, Marcus stayed confident:

We believe strong regulatory oversight preventing the Libra Association from deviating from its full 1:1 backing commitment is desirable.

Reporting at the time indicated that at least three members of the Libra Association were not fond of the regulatory requirements.

Why more companies might want to leave

Because of reports that PayPal was not the only company nervous about regulators, many expected more members to quit the Libra Association.

After regulators analyzed Facebook's plans with a critical eye, they also began to look at the company's acquisitions. Members of the Libra Association likely did not want the negative attention from regulators that Facebook was bringing on itself.

President Trump also tweeted negatively about Libra, implying that the project was in the business of becoming a bank and would be treated as one. Libra members had all joined before the wave of government criticism, and may not have expected it to play out this way.