Originally, Facebook’s latest project Libra was supposed to be a single currency (Libra) backed by a basket of currencies and assets to be offered to customers via a wallet, in order to promote financial inclusion and improve the financial system.
Since their announcement, the group was subject to criticism from governments and regulatory bodies suggesting that this is a threat to the sovereignty of their currencies. David Marcus, head of Calibra, appeared in front of congress and explained that they have made the announcement early in order to work with regulators and meet demands.
Financial Stability Board
Yesterday, the FSB released a consultative document about global stablecoins (GSCs) and the prime candidate is Libra in this case. Facebook alone has access to 2.5 billion individuals worldwide, their influence has become larger than most governments’.
In order to comply, Libra will be changing their approach and will look to launch in late 2020 instead of June. Their plan has become to launch single-currency stablecoins based on several undecided national currencies, of which could be a USD, EUR and GBP version for example.
“We’re retaining the construct of a multi-currency Libra, but it’s fundamentally changed, streamlined and simplified relative to the original one” said Christian Catalini, head economist at Calibra. This will avoid any financial instability possibilities that were raised by the FSB.
Additionally, they will register with the the U.S Treasury’s Financial Crimes Enforcement Network (FinCEN) as a money services business which will require them to constantly report movements by users.
Although not yet approved, this move will surely increase the chances for the success of project Libra after the regulatory criticism it underwent.