Libra

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Libra is a cryptocurrency developed by Facebook and other founding members of the Libra Association that initially included companies such as: Visa, Uber and Andreesen Horowitz. The digital currency was announced on June 17, 2019 and is set to launch in the first half of 2020.

The cryptocurrency, which will be handled by a Facebook subsidiary called Calibra, is designed so consumers can buy items or send money with nearly zero fees. The ambitious plan aims to bring cryptocurrencies to the consumer sector in a meaningful way.[1]

Libra tokens will be directly backed by fiat currencies such as the US dollar and euro. Management of the cryptocurrency will be run by the Libra Association, a nonprofit entity based in Switzerland that will be independent of Facebook. The association will grant equal voting rights to each member over the design and release of Libra. The association was started with 28 member firms and non-profit organizations, although key members soon pulled out of the group.[2]

Libra payments will be incorporated into Facebook's social media channels and messaging services such as WhatsApp and Instagram.[3]

Early Resistance

In the days following the announcement of Libra, several regulators expressed concerns over the cryptocurrency and Facebook's plans. US legislators moved quickly to hold hearings on the project and told Facebook to stop development until questions were answered. European central bank leaders, Financial Stability Board and the Financial Conduct Authority in the UK also wanted more details on Libra and potentially cryptocurrencies in general.[4][5]

In September 2019 regulators in France and Germany said they would block Libra from operating in Europe and supported a public cryptocurrency instead. US banking agencies such as the US Treasury Department also indicated Libra could not advance until privacy, money laundering, consumer protection and financial stability concerns were addressed.

In the subsequent months, more early supporters of the project withdrew their support for Libra as more regulators expressed opposition. In October 2019, Visa and Mastercard withdrew from the Libra Association along with eBay Inc., Booking Inc., Stripe Inc. and Latin American payments company Mercado Pago. They joined PayPal Holdings, which withdrew a few days before them. The departures left the Libra Association without any major payments companies as members or convert currencies into Libra or facilitate transactions.[6][7]

References

  1. Facebook announces Libra cryptocurrency: All you need to know. TechCrunch.
  2. Facebook Plans Global Financial System Based on Cryptocurrency. New York Times.
  3. Facebook Unveils Libra Cryptocurrency, Targeting 1.7 Billion Unbanked. Coindesk.
  4. Regulators Have Doubts About Facebook Cryptocurrency. So Do Its Partners.. New York Times.
  5. European watchdogs demand detail on Facebook's cryptocurrency. Reuters.
  6. Facebook's Libra currency abandoned by major financial companies. Reuters.
  7. Inside Facebook’s Botched Attempt to Start a New Cryptocurrency. Wall Street Journal.