PayPal Holdings Inc.’s decision to pull out of the Libra Association may lead to more congressional hearings from critics seeking to press the payments company for more details on why it walked away, according to Cowen.

A push for hearings may intensify further if Libra -- Facebook Inc.’s effort to develop a digital currency -- were to lose other members, analyst Jaret Seiberg wrote. Not only has Facebook failed to win Washington’s “buy in,” it’s also lost support and the “messaging war,” he said. And Seiberg warned that other backers may join PayPal in retreating rather than “risk getting pulled into the policy fights over privacy and private currencies.”

PayPal pared losses of as much as 2 per cent as Facebook declined as much as much as 1.1 per cent. Meanwhile other Libra backers -- Visa Inc. and Mastercard Inc. -- both fell more than 1.7 per cent before paring some of the drop. Financials declined across the board, along with the broader market, as analysts fretted about banks’ prospects and trade tensions flared.

On Monday, Morgan Stanley analyst James Faucette described PayPal’s decision as wise. “While we believe it made sense for PayPal, Visa, and Mastercard to initially participate in Libra to defend their flanks and maintain optionality, the amount of political attention Libra has received has made the opportunity less attractive,” Faucette wrote.

Cowen’s Seiberg has consistently doubted Facebook’s ability to secure the necessary regulatory approvals as the social media company is “framing Libra as an independent entity that will control the transaction data of users.” Big partners exiting may mean it will be “harder to convince policymakers that Libra is independent of Facebook.” He expects Facebook will stay in the spotlight and will face mounting scrutiny as the 2020 election approaches.

Separately, Height Capital Markets in a note said that “one withdrawal does not doom Libra, but if there is a cascade of departures the Libra project may collapse before it can launch.” The firm also saw regulators’ focus on financial stability as “overstated,” as Libra won’t be issuing any country’s currency or debt, but will convert a given currency into Libra currency, and Libra will be “backed by a basket of short term debt instruments issued by sovereign nations.”

Earlier, Loop Capital analyst Alan Gould wrote that Libra “will likely take much longer than initially anticipated” and more government regulation and fines could be on the way.