Saturday, November 28, 2020

Facebook will launch its Libra cryptocurrency in 2021 (but it won't be as expected)

Key facts:
It will initially consist of a dollar-backed stablecoin.
The Libra Association awaits approval from the Swiss financial regulator.

Libra, the cryptocurrency proposed by Facebook could be launched in January, although not as expected, but in a different format and in a limited way, according to a report by an American digital medium.

The Libra Association, of which Facebook is one of its 27 members, will launch a stablecoin backed one to one by the US dollar. It will not be the digital version of the currencies of various countries as mentioned in March. This was reported to the Financial Times by various sources linked to the project.

The stablecoin's launch date depends on when it receives approval to operate as a payments service from the Swiss Financial Market Supervisory Authority (FINMA). However, it is scheduled to be in January, according to the aforementioned media outlet.

On the other hand, a person involved with the development of the Novi wallet, which will support the stablecoin Libra, told the Financial Times that the product is finished, but initially its launch will not be extended globally, but will be limited. For that reason, the Libra Association would have prioritized six high-volume remittance corridors, including some from the United States and Latin American countries.

A degraded project

Facebook began making changes to its project after succumbing to pressure from regulators. The concerns revolved around the influence that the social network could have on the development of a cryptocurrency and its impact on international monetary policies.

The project emerged in June 2019 and initially received support from payment companies such as Visa and Mastercard. However, before long the concerns of banks and regulators triggered the exodus of several initial backers. The fears were centered on money laundering, as it was thought that the Libra cryptocurrency could allow criminals to move money across national borders quickly, without supervision. Many also feared the influence that a social network like Facebook could have in the world of finance.

Subsequently, Libra's main forerunners were pulled from the project due to mounting regulatory pressure. In December of last year, the president of Switzerland said that the Facebook project had failed as it had been up to that moment and had to be redefined in order to be approved.