Facebook is willing to reverse course on its plans to tie its digital currency
project to a synthetic currency tied to a basket of global currencies.
Reuters is reporting
Facebook?s head of the Libra project, David Marcus, told a group of bankers that
the company?s main goal was to create a better payments system and was open to
alternative approaches to the original structure of the project.
Facebook and its partners had intended to create its cryptocurrency by pegging
it to a basket of national currencies whose holdings would be set by the Libra
National banks considered the plan part of a dangerous end-run around their
regulatory authority and have been holding up the project until they could
assume tighter control over how the Facebook-architected cryptocurrency and
payment technology would operate.
The scrutiny from regulators proved too much for some of Facebook?s largest, and
earliest, partners in the Libra Association, whose members would determine how
the cryptocurrency would operate.
In the past monthseven of the Libra Association?s founding members dropped out
[https://techcrunch.com/2019/10/14/libra-meeting/]including: PayPal, Mastercard,
Visa, Ebay, and Stripe. Those seven represented a big chunk of the strategic
value and commercial heft of the planned association, with Stripe, Mastercard,
Visa, and Ebay standing in for a huge number of payment processors and merchant
touchpoints that the new cryptocurrency would need were it to dramatically scale
to the size Facebook wanted right out of the gate.
Now, in another strategic reversal, Marcus is conceding the synthetic currency
in favor of stablecoins tied to the local currency in each market that Libra
?We could do it differently,? Reuters quoted the Libra Association chief as
saying. ?Instead of having a synthetic unit ? we could have a series of
stablecoins, a dollar stablecoin, a euro stablecoin, a sterling pound stable
All of this is happening against the backdrop of Facebook?s stated launch date
of June 2020 for the Libra cryptocurrency. Marcus told Reuters that the June
launch was still the goal, but that the association would not move forward
unless it had addressed the concerns of regulators and received the proper
Those approvals are becoming harder to come by as the regulators who overseen
global monetary policy cast a more skeptical eye at on stablecoins as well
Reuters reported that the G-20 financial overseers wrote in a statement that
money laundering, illicit finance and consumer protection need to be evaluated
before any stablecoin projects can ?commence operation.?