In June this year, Facebook announced the development of its very own digital currency Libra, and its launch in 2020. A few months after the announcement, all went downhill for the Libra project.
First, U.S. lawmakers delivered stern warnings to Libra members and publicly asked Visa, Stripe and Mastercard to remove themselves from the Libra project.
Second, Germany and France decided to reject and block the Libra project, pledging to “fight the tech giant’s attempt to claim monetary power”.
Third, Mastercard, Visa, Paypal and four other major firms exited the global stablecoin cryptocurrency project, dashing Facebook’s hopes of creating a distributed, global currency.
The future seems dim, but is all lost for Facebook’s Libra?
Facebook seems to be relatively calm despite its losses. The Libra Association still retains 21 out of 28 of its member entities. In a press statement shared with Cointelegraph, the Libra Association mentioned that “over 1,500 entities have indicated interest in joining the Libra project effort, and approximately 180 entities have met the preliminary membership criteria.”
That said, regulatory resistance is formidable. The emerging technology, which is now mostly unregulated, like other cryptocurrencies, could also hinder cross-border efforts to fight money laundering and terror financing, and throw up problems for cybersecurity, taxation and privacy. Thus, plans to launch the Libra cryptocurrency faced a new hurdle when G7 nations said such “stablecoins” should not be allowed to launch until the profound international risks they pose are addressed.
The Way Forward
All is definitely not lost for Libra.
The Libra Association has the blessing of Switzerland’s Financial Market Supervisory Authority (FINMA), giving it a respected, regulated home base from which to develop the project. While the association’s resources and lobbying clout would have been greater with Mastercard and Visa onboard, its pockets are deep enough to fund ongoing, constructive negotiations with authorities in different countries.
Furthermore, though some developing countries like India are hostile to Libra and other cryptocurrencies, others are pursuing them as solutions to their citizens’ financial challenges. Such include Caribbean countries, which suffer from costly cross-border transactions and “de-risking” by foreign banks for whom tighter U.S. compliance requirements have led them to curtail correspondent banking relationships with institutions in such countries.
J.P. Morgan Chase’s CEO Jamie Dimon says Libra is a “neat idea that will never happen”, while Felix Hufeld, President of BaFin, says “Don’t think Facebook’s Libra is dead in the water”.
What do you think will be the future of Libra?
Please feel free to share the article if you enjoyed it! You can trade* Bitcoin, Ethereum, Tether and other altcoins on ecxx.com too. Sign up for an account here now.
Disclaimer: This article is not trading or investment advice. It is for entertainment and educational purposes only. Please do your own research before investing into any digital currency.