Facebook is changing its plans for the Libra cryptocurrency project after months of tough regulatory and political pressure.
The social network is considering the possibility of including many currencies in the system, including national ones. It is expected that this will help to reduce the fears of the authorities, actively opposing the company’s encroachment on their monetary monopoly. Initially, it was assumed that Libra will have its own cryptocurrency, which is the center of the cryptocurrency payment system.
Instead, it is reported that the Facebook project will switch to supporting both existing state currencies, such as the US dollar and euro, and the Libra token, if, of course, all claims and restrictions of the authorities are overcome.
In addition, according to The Information, Facebook is delaying the launch of its separate Calibra digital wallet, which allows anyone with a smartphone to purchase and store cryptocurrency, and then use it to pay for the purchase of goods and services. Now the wallet will support several currencies, not only Libra.
The company expects to integrate the wallet into the WhatsApp and Messenger applications. At the first stage, the service will be available in a limited number of countries where tokens tied to local currencies will be issued.
According to Bloomberg sources, the Libra Association will present an updated plan in the near future, but is not revealing it yet, as the model may still be revised. The agency notes that if Libra becomes a regular payment system and rejects plans for the introduction of cryptocurrencies, there will be no difference between existing projects like PayPal.
According to the sources of the publication, even this updated Facebook plan can be met with criticism from the US Federal Reserve System, which will arrange checks for compliance with equity requirements, as well as stress testing.
A spokeswoman for Facebook in a comment by Ars Technica confirmed that plans to offer Libra cryptocurrency in a Calibra wallet are still relevant. A spokeswoman for the Libra Association said the creation of a regulatory-compliant global payment network is still an ongoing project goal.
At the same time, Bloomberg sources claim that the information on the revision of plans is not public today, as it has not yet been approved, but will be released in the near future.
The Libra cryptocurrency, as conceived by the creators of the project, was to become a means of payment in the Facebook ecosystem, which unites almost 2 and a half billion users. In addition to Facebook, dozens of companies participating in the Libra Association project, will determine the development vector of the Libra blockchain.
Facebook is positioning itself as one of the equal participants in this project. However, experts say that due to access to data from 2.4 billion users, it is Facebook that will play a key role in the project.
However, a number of the largest participants, including the eBay electronic marketplace, Stripe payment company, as well as Visa and Mastercard payment systems, left the Libra blockchain project last year. Companies made the decision under pressure from regulators after PayPal also refused to participate in the Zuckerberg cryptocurrency project.
Facebook’s ambitious plan to launch a new cryptocurrency attracted the attention of American and European lawmakers a day after the announcement of the project, and some politicians called for the suspension of the Facebook payment service.
Regulators were worried about the potential negative impact of Facebook on the project due to the fact that the company has a financial interest, as well as the unforeseen consequences of the fact that commercial companies can start issuing currency and join the global economy and geopolitics.
There were also concerns about how to classify the Libra token and how the entire platform would be properly regulated and by whom, especially as it moved into banking services sectors such as lending, to which Facebook was openly interested. The main concern was the ability of the currency and blockchain technology to transfer money anonymously outside the banking system, which could potentially lead to money laundering and other criminal activities.
In December last year, the European Union banned the use of so-called stablecoins – cryptocurrencies, the rate of which is tied to some assets, including classical currencies, on its territory. The European Union recognized that stablecoins are of particular interest to businesses, as they provide an opportunity to make cross-border payments quickly and cheaply. At the same time, such currencies are no less reliable than the usual ones, since the value of one stablecoin can be tied to the dollar, euro or even a basket of stable currencies that people tend to trust.
That is, the reason for the ban is not instability, but rather, it is too attractive. If a stablecoin becomes global, it will threaten the traditional financial system and jeopardize, as they say, “monetary sovereignty, monetary policy, security and efficiency of payment systems, financial stability and private competition.”
Therefore, stablecoins must be prohibited. But only until the countries of Europe agree on how to regulate such currencies. The statement is directed primarily against one specific cryptocurrency – Libra.