Facebook-sponsored digital currency Libra is scheduled to launch as early as January next year, but the actual range of Libra versions will be more limited than previously expected, according to three people familiar with the matter.
Libra’s original plan was to launch a basket of currency-backed synthetic tokens, but the move raised concerns from regulators. Therefore, in April of this year, the Libra Association adjusted its original plan, saying that it plans to launch digital versions of several currencies, as well as “digital composite versions” of all tokens.
However, the association will only issue a single token backed by the U.S. dollar this time around, one of the people said. Other currencies and synthetic versions will be launched at a later stage, the person added.
The exact timing of Libra’s launch depends on when the Swiss Financial Market Supervisory Authority (Finma) approves the project to go public as a payments service, but could be as soon as January, the three people said. The Swiss Financial Market Supervisory Authority responded that it would not comment on Libra’s application. The application was originally submitted in May.
The Libra project was first proposed in June 2019. The vision of the Libra project has been downgraded repeatedly as the project has been questioned by regulators around the world. Regulators are concerned that Libra will threaten the stability of the currency and become a tool for money laundering.
While narrowing Libra’s scope could please wary regulators, critics have complained that a single-currency-backed token could make users pay extra when converting currencies, allowing the project to so-called “achieve broader financial penetration” “The name is not true.
The Libra project was originally proposed by Facebook executives. But the birth of Libra was full of twists and turns. In late 2019 and early 2020, the founding members of the project (including PayPal, Mastercard, Vodafone, and eBay, among others) pulled out one after another, and deliberately distanced themselves from the controversial project.
Then, in April, the Libra Association announced that it would overhaul the project’s vision to address regulators’ concerns, while narrowing the scope of the project and pledging to take additional steps to manage the system to prevent abuse.
The Libra project has also been questioned because of the privacy scandals Facebook itself has faced. But several Libra members said that in May, the association’s appointment of Stuart Levey, HSBC’s legal director and former government official in charge of fighting terrorism financing, as the association’s first chief executive, marked a major milestone in the project. Turning point, striving to be independent from Facebook.
Since then, some members have been scrambling to develop and test their own products so that they can launch products on the digital currency network in time when it actually goes live. One such project is Facebook’s Novi (formerly Calibra), a digital wallet that allows Facebook users to hold Libra.
A person familiar with Novi said the wallet is “ready from a product perspective” but will not be rolling out anywhere at this time. Novi needs to obtain licenses in various U.S. states, the person said. Novi has been licensed in multiple states, but is still waiting for “up to ten states, including New York”.
It is unclear how key members of the association, such as Uber and Spotify, will utilize the currency. Some members revealed that they will first observe the market reaction after Libra’s release before considering use-case investments.
At the same time, Bitcoin rose to an all-time high of nearly $20,000 this week, as professional investors and central banks showed increased interest in digital currencies and the pandemic accelerated the transition from cash to digital payments. Separately, PayPal, the first founding member to exit the Libra project, announced last month that it would support cryptocurrencies. PayPal’s CEO also called the digital transformation of the currency “inevitable.”