Facebook’s first foray into the cryptocurrency field made a huge splash in 2019. However, roughly nine months on from the white paper unveil of Facebook’s ”Libra” crypto, the Menlo Park company faces issues. Now, high-profile news outlets report that Facebook will drastically ”rethink” Libra.
Facebook is facing more resistance than it thought from regulators
According to reports by Bloomberg and the BBC, Facebook is facing more resistance from regulators than it thought it would. Cryptocurrency firms are, by now, familiar to the struggles with trying to get regulators to approve ambitious crypto projects.
When Libra was first launched, observers suggested that Facebook’s digital currency offering could pave the way for other crypto firms. Seeing as Facebook is a household name with significant sway – the reasoning went – it could convince regulators to accept digital currencies in general.
However, it seems that resistance from regulators was, instead, enough to break Facebook’s resolve. According to recent reports, Facebook is now instead ”rethinking” the promise of its Libra crypto.
Facebook looks to ”revamp” Libra to avoid competing with CBDCs
Bloomberg reports that Facebook is now ”revamping” Libra, and considers using a system which accepts multiple coins. What’s more, this report also suggests that Libra will accept coins that central banks potentially issue. As such, Facebook is hoping to make the project more attractive to global regulators.
Essentially, this means that any CBDCs will not be in direct competition with Facebook’s Libra project. Rather, they could be compatible with the Libra Association’s upcoming network.
Moreover, the report suggests that Facebook is also scaling back its original plans for Libra. The cryptocurrency project was originally meant to create a single, global digital currency. As such, Libra would take on Bitcoin and, in Facebook’s view, hopefully win the title of the dominant digital currency.
Will Libra instead become ”just” another PayPal rival?
Nevertheless, the Bloomberg report suggests that Facebook’s new plan for Libra is more akin to a payments network. This payments network would work with multiple coins, according to sources familiar with the project.
The Bloomberg report notes that this would essentially position Libra as a rival to existing payments systems such as PayPal. Facebook is also stating that it ”remains fully committed to the project” – but it is unclear in what capacity.
According to Dante Disparte, the head of policy and communications for the Libra Association, Libra was always a payment system.
”The Libra Association has not altered its goal of building a regulatory compliant global payment network, and the basic design principles that support that goal have not been changed.”
With that said, however, sources familiar with the project note that these plans and redesign is still ”in flux”. That means that this revamp is still not entirely certain – but it seems clear that Facebook is facing issues with the rollout of Libra.
Rasmus Pihl is a writer for Toshi Times by day and an avid follower of the blockchain industry by night. Rasmus holds a Bachelor’s Degree in Marketing from the Gothenburg School of Business, Economics, and Law and runs a Swedish marketing consulting firm. Moreover, when he isn’t writing for Toshi Times, traveling, working or changing the world in some other capacity, Rasmus is more than likely caught up in postgraduate studies.