Published: December 1st, 2020
Sources close to Facebook's Libra project say the cryptocurrency is being readied for launch in January 2021. However, the project has had to scale back substantially compared to the initial proposal due to regulatory constraints and political backlash.
According to the Financial Times, the Libra cryptocurrency proposed by Facebook is being readied for launch. The rollout may come as early as January 2021, according to sources close to the project. Citing three people who FT said are close to the project but chose to remain anonymous, the Libra Association will launch a single virtual currency backed by the dollar.
The Geneva-based Libra Association will govern the coin. According to the sources, the move is a more significant scaling back than the project's initial blueprint announced in May 2009. The retractions are a result of the relentless political and regulatory backlashes against the project.
Libra, which was officially unveiled by Facebook Inc., in mid-June 2019, now comes in a substantially trimmed form after central banks and regulators from all over the world expressed concerns that the planned cryptocurrency could unsettle financial stability and sweep away the established power of money.
The Libra Association now boasts 27 members, with Facebook representing just a slim portion of the whole piece. The organization's overall plan is to get a nod from Switzerland's financial markets regulator, the Swiss Financial Market Supervisory Authority (FINMA), to release several stablecoins and tokens anchored on the Libra.
However, under the organization's new plan, other traditional currency-backed coins would be launched later, adding the FT news article. The Libra Organization's wisdom in preferring stablecoins is because of the virtual asset's design to resist the typical volatility often witnessed in regular cryptocurrencies.
The stated feature makes these virtual coins more suitable theoretically for facilitating money transfers and payments.
Efforts to get the Libra team to comment on the story have so far been unsuccessful. Besides, the Swiss regulator, FINMA, did not elaborate on Libra's plans aside from confirming receipt of the organization's application for a payment services provider's license.
The exact rollout date remains unknown. However, the cited sources said it would depend on when the Swiss regulator grants the Libra Organization the payment service license.
The organization was created in June 2019 and almost immediately run into a series of unending regulatory scrutiny. The keen eye of the regulators, politicians, central bankers, and policymakers from all over the world caused several pioneer members such as MasterCard and PayPal to grow cold feet, subsequently leaving the project.
The basket of currencies proposed in the original plan to back the Libra included several fiat currencies such as the U.S. dollar, the Japanese yen, the euro, the Great Britain pound, and the Singapore dollar.
Libra's announcement attracted a fair amount of friction. Aside from unsettling the world order of currencies, global regulators feared that the cryptocurrency was lining up to become a hotbed of money laundering.
While the trimmings proposed before the possible January launch seem to appease disgruntled regulators, critics are still wary that migrating to single-currency coins could be unfair to users by imposing additional costs should they want to convert currencies. The critics say that such a situation undermines the project's ambition of facilitating greater financial inclusion.
Besides slicing Libra's scope and features, the organization has promised to throw in extra measures to police the system from abuse. The project has attracted more fire for its kinship with Facebook, which birthed it. The network has been a subject of multiple privacy scandals, and critics think the challenge opens the cryptocurrency for abuse from other quarters.
However, several Libra members believe the appointment of Stuart Levey, a former George W Bush-era terrorism and financial intelligence undersecretary and HSBC legal chief as the CEO, marks a turning point for the project. Market analysts also see Levey's appointment to indicate the project's complete dissociation and independence from Facebook.
Since the new CEO's appointment, numerous Libra members have rushed to build and test-run products that they hope to anchor on Libra's network when it finally goes live. Among the members is Novi, a Facebook subsidiary formerly known as Calibra, which is creating a cryptocurrency wallet that would allow Facebook users to hold and use the Libra coin.
Andrew Morse, a staffer at CNET, said that while the Libra organization is trying to appease critics and regulators, Facebook's grip on the cryptocurrency cannot be downplayed. The social media network has long-standing interests in digital cash, which stretch way back before Libra.
It ran Credits, a virtual currency that allowed the platform's users to make payments for in-app purchases on the games that it hosts. Besides, Mark Zuckerberg, Facebook's CEO, said that transferring money online should be as easy as sharing photo files.
Libra's underlying aim is to make sending money more comfortable and cheaper, and Facebook hopes that this attractive feature will attract more people to the social media platform.
Zuckerberg is on record admitting that Libra's global acceptance would benefit Facebook by increasing the uptake of advertising services of the platform, making such offers more expensive.
And, Facebook's subsidiary developing a cryptocurrency wallet that it will anchor on the Libra network only confirms the critics' fears, Morse said. The crypto enthusiast noted that the only silver lining in the association is that Facebook
will not control the Libra Organization. Instead, it will remain a member of an organization whose membership is intended to grow to 100, each with an equal say.
Sources close to the Libra Organization told FT that the Geneva-based organization plans to unveil the Libra cryptocurrency as early as January 2021. The move now awaits a nod from the Swiss financial markets regulator, FINMA. FT reported that the unveiling would present a much scaled-down project compared to the elaborate idea that Facebook first introduced to the public in May 2019.