Libra to launch as early as January, but the Facebook backed cryptocurrency will be scaled back even further after regulatory and political concerns
Facebook is to press ahead with its controversial Libra digital currency project, after it was reported that it will be launched as early as January next year.
Facebook had surprised many when it announced Libra in June 2019, and said it planned to launch it by June 2020.
This sustained pressure and pushback from politicians and regulatory bodies globally, caused the project in March to announced it was to ‘rethink’ its plan for Libra.
The independent, Geneva-based project, whose development was led by Facebook, was originally intended as an electronic medium of exchange backed by an array of assets, but independent of any national currency.
Critics, including central banks and regulators, had argued this would create a host of risks ranging from money-laundering to the destabilisation of state-backed currencies.
The 22-member Libra Association said in April that its “Libra 2.0” plan was to focus on digital versions of single currencies, such as a Libra dollar or a Libra euro, backed one-to-one by cash or cash equivalents, with support from a capital buffer.
The group also said at the time it would support the central bank digital currencies planned by some central banks.
The association said it was still planning to create a “multi-coin currency”, which it said would be a digital composite of some of its single-currency coins.
The group also said it no longer intends to move to a fully permissionless system over which no single authority has control, while maintaining the “key economic properties” of a permissionless system.
And now the Financial Times has reported that Libra could launch as early as January, with the newspaper citing three unidentified people involved in the project as its source.
But the launch will be even more limited than the scaled back plan announced in April 2020, with one of the people telling the FT that the Libra Association plans to only launch a single digital coin backed by the US dollar.
The Libra Association, of which Facebook is one of 27 members, is seeking the go-ahead from Switzerland’s markets watchdog to issue a series of stablecoins backed by individual traditional currencies, as well as a token based on the currency-pegged stablecoins.
Yet under the body’s new plan, other coins backed by traditional currencies, as well as the composite, would be introduced at a later date, the FT said.
The Libra Association has been bolstering its management credentials in 2020.
In October it hired another former HSBC executive, Ian Jenkins, as CFO and chief risk officer of Libra Networks.
Jenkins was HSBC’s former business finance head and group general manager, and over three decades has also previously worked at Credit Suisse and Santander.
It also appointed a number of senior executives in 2020, including Stuart Levey as CEO and Steve Bunnell as Chief Legal Officer.
This followed the appointment of former HSBC European head James Emmett as MD of Libra Networks, as well as Sterling Daines as Chief Compliance Officer.
It needed some much needed expertise and creditability considering the fierce opposition Libra has faced, which resulted in a number of departures from the Libra Association itself.
Indeed, five major payments providers pulled out of the currency, after Mastercard, Visa and eBay withdrew from the Libra Association in October 2019, as well as fintech start-up Stripe and payments firm Mercado Pago.
That move followed PayPal’s exit from the association, and left the project without the backing of any major payments firms.
Worse was to come in August 2019, when the UK Information Commissioner signed a joint statement alongside her counterparts in the United States, Canada, Australia and the European Union, “to express our shared concerns about the privacy risks posed by the Libra digital currency and infrastructure.”
That concern came after the chairman of the US Federal Reserve, Jerome Powell, who said that Facebook’s Libra cryptocurrency project, “cannot go forward” until serious concerns are addressed.
Facebook in October 2019 said it was open to alternative approaches with Libra, including issuing multiple coins linked to different national currencies.