Facebook Dramatically Changes Plans for Libra After Intense Regulatory Backlash

Facebook Dramatically Changes Plans for Libra After Intense Regulatory Backlash

Facebook is looking to dramatically alter its plans for the upcoming ”Libra” stablecoin. New reports suggest that Facebook is moving ahead with a substantially less ambitious vision for Libra than previously. This comes as Facebook is hoping to win regulatory favor with a rethought version of Libra.

Facebook abandons previous Libra plans

Facebook and the Libra Association have both seen intense pushback from governments and authorities all around the world, after announcing the Libra stablecoin last June. Libra, Facebook’s crypto offering, was initially intended to compete with other digital assets.

The original plan was that Libra would have a mix of fiat currencies and government debt underpinning it. As such, the Libra Association would ensure an “underlying value” in its stablecoin offering. However, central banks and regulators were hesitant to approve it.

Toshi Times reported that Facebook was supposedly having issues with Libra and was considering “rethinking it” over a month ago. Now, recent reports are confirming that Facebook is dramatically scaling down its cryptocurrency plans.

The New York Times reports that Facebook and its partners are outright abandoning its plans for making Libra “the basis of a new global financial system”. Instead of creating a digital currency to take on the likes of Bitcoin, the Libra project will focus on developing a more traditional payment network.

Revamped Libra designed to win regulatory approval

This network will tie digital coins to local currencies. As such, it will be more of a PayPal competitor than a Bitcoin competitor. Although the project will still feature a Libra coin with backing from fiat currencies, this won’t be its main feature.

What’s more, the Libra Association is working to win regulatory approval for its payment network. It is working with the Swiss Financial Markets Supervisory Authority (SFMSA) and a “college” of regulators from over 20 countries. Developing Libra together with these will hopefully ensure that authorities around the world are on board. 

Prior to this, Libra was slated for a public launch at the end of June of this year. However, these recent changes to the stablecoin is pushing the tentative launch of it to sometime between mid-November and the end of the year.

This comes as governments around the world are accelerating research on issuing “central bank digital currencies”, or CBDCs. A recent report suggests China could be about to launch CBDC trials in the coming days or weeks. 

According to a fresh Reuters report, this upcoming revamp of Libra could add “direct integration” of potential future CBDCs.