Facebook’s plans for its proposed new ‘Libra’ digital currency may be scaled back in a compromise that would allow for its launch in a way that would attract less regulatory heat.
The social media giant had hoped to this year offer at least some of its 2.9 billion global users a fully digital currency, that operates in a similar way to cryptocurrencies like Bitcoin, that would allow them to receive and make money transfers at next to no cost. However, with the plans drawing the ire of regulators around the world, the U.S. tech giant is now reportedly considering a change of approach.
The new route to market would see Facebook first launch a digital payments network similar to existing products such as PayPal, that would allow for the transfer of existing national fiat currencies such as the dollar, pound, euro or yen. In the meanwhile, say reports on Bloomberg and tech website The Information, the Libra Association would continue its work on launching the libra currency.
The Libra Association, set up as an independent entity and including commercial partners and NGOs who support the initiative, insists that, along with Facebook, it remains “fully committed”, to the project and the eventual full launch of Libra as a digital currency. Dante Disparte, the Association’s head of policy and communications, stated:
“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.”
Plans for Libra were first officially announced last June after several months of speculation that Facebook was planning its own cryptocurrency. The social media company had signed up 27 companies, plus NGOs, to the Libra Association, set-up to control and govern the currency independently from Facebook.
Libra, which would be transferable via Facebook’s Messenger and Whatsapp chat apps, is seen as a way to provide basic, and later more sophisticated, financial services to populations without access to a traditional bank account. It was also seen as a way form migrant workers to repatriate money earned abroad cheaply.
International regulators were, however, less than enthusiastic about the proposal. They, along with politicians and central bankers, expressed reservations on Facebook’s trustworthiness as a protector of financial data. Another major concern was the influence mainstream adoption of Libra would afford a private company – especially one with a patchy record on ethics and data protection.
France went so far as to state that the scheme threatened the “monetary sovereignty” of governments. The potential for the technology to be used for money laundering was another concern raised in numerous quarter.
Several of the companies that had originally signed up to the Libra Association, including Mastercard, Visa and Paypal, have since pulled out. Presumably keen to avoid potentially heavy handed regulatory scrutiny. A recent positive for the Libra Association was last month’s announcement that ecommerce platform provider Shopify had come on board.