Facebook Inc. and its partners are considering redesigning the Libra cryptocurrency project so that the network accepts multiple coins, including those issued by central banks, in an effort to woo reluctant global regulators and rebuild momentum for the plan.<\/p>\n
When Facebook unveiled Libra, it said it intended to create a single global digital currency. Anyone, especially the 1.7 billion people who have no bank account, could send money anywhere in the world at little cost, as easily as sending a text.<\/p>\n
Eight months later, after the idea ran into a wall of opposition, Facebook and the Libra Association, the consortium behind the digital currency, are looking at a revamp, said three people familiar with the matter. They are weighing a recast of Libra as mostly a payments network that could operate with multiple coins, two of the people said.<\/p>\n
The coins could include those issued by central banks and backed by the U.S. dollar, the euro or other currencies, the people said. The association will re-introduce Libra soon, said the people, who asked not to be named because the redesign remains in flux and the plan could change.<\/p>\n
The dream of a single global coin isn\u2019t dead, said one of the people familiar with the overhaul. The new plan could expand, not pull back from, the original vision, that person said.<\/p>\n
But if the revamped Libra becomes more of a payments network than a single, global cryptocurrency, the average U.S. consumer might not see much difference between Libra and existing payments systems run by PayPal Holdings Inc. or numerous fintech startups that aim to seamlessly move funds around the globe.<\/p>\n
\u201cThe 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,\u201d said Dante Disparte, head of policy and communications for the Libra Association, in a statement.<\/p>\n
Facebook said it \u201cremains fully committed to the project.\u201d<\/p>\n
What happened to Libra since its June 2019 unveiling is a story of hubris, wary lawmakers, protective regulators and partners fearful of the risks involved. Facebook and 27 other companies announced the project as a way to connect the globe — while also circumventing the financial system — and reduce the cost of sending money, especially for unbanked populations.<\/p>\n
The project\u2019s members included Visa Inc., Mastercard Inc. and other large companies that would be Facebook\u2019s partners in governing the system.<\/p>\n
As originally envisioned, the Libra coin would be created from a\u00a0basket<\/a><\/strong>\u00a0of relatively stable assets, such as U.S. dollars and government bonds, euros, Singapore dollars, U.K. pounds and Japanese yen.<\/p>\n A Libra Reserve made up of those currencies and debt instruments would support the token, whose value would adjust along with the underlying assets\u2019 market value.<\/p>\n But the plan almost immediately ran aground. U.S. lawmakers said they didn\u2019t trust Facebook to manage a financial network after the company\u2019s high-profile missteps in other areas, especially its repeated failures to protect user data.<\/p>\n Officials at some central banks said the new digital coin could undermine the sovereignty of their own currencies, while finance ministers worried that it could enable money laundering. Some European regulators vowed the project would never win approval.<\/p>\n As the Geneva-based Libra Association tried to formalize its membership in October, many of its most prominent members, including Visa and Mastercard, dropped out.<\/p>\n The project now has 20 of the original 28 members, though it recently added two others — cloud-based commerce company Shopify Inc. and cryptocurrency trading platform Tagomi Trading LLC.<\/p>\n Even as some left the project for dead, representatives of Facebook and the association have continued to meet with officials at the Treasury Department, the Securities and Exchange Commission, and other U.S. regulators to address their criticisms, the people familiar with the matter said.<\/p>\n Treasury officials, in particular, have continued to focus on how the project will ensure the payments network isn\u2019t used for money laundering, one of the people said.<\/p>\n Some people connected to the Libra project worry that the SEC could rule that a coin backed by a basket of currencies is a security, which is a tradeable financial asset like a stock or a bond. Such a determination would subject the Libra to a slew of disclosure requirements and impose the same tight restrictions that the regulator places on stock offerings, undermining the coin\u2019s usability.<\/p>\n Central bank officials have also said that if Libra issues a coin backed by multiple currencies, it would undermine their ability to manage their own currencies.<\/p>\n Since Facebook announced the Libra project, several central banks, including the Bank of England and the European Central Bank, have said they are exploring their own digital currencies.<\/p>\n The overhaul is intended to ensure that the new payments network would be compatible, rather than in competition, with those projects, the people said.<\/p>\n Libra and Facebook officials have spent the past few months traveling the world to speak at conferences, making the case that a payments network such as Libra could lower the cost of money transfers.<\/p>\n At the World Economic Forum in Davos, Switzerland, in January, Facebook executive and Libra co-founder David Marcus\u00a0emphasized<\/a>\u00a0that the Libra network wouldn\u2019t preclude central bank projects.<\/p>\n \u201cI want to really make that distinction between the network and the assets that are running on top of the network, which I think could be issued by many different entities whether it\u2019s central banks or the private sector,\u201d Marcus said, signaling that Libra\u2019s new form could host multiple digital coins.<\/p>\n \u201cWe think there\u2019s a lot of momentum building,\u201d said Jennifer Campbell, the founder of Tagomi, one of the new members of the consortium. She said Libra \u201cis definitely first and foremost a payment system. Within that there\u2019s definitely also a coin that\u2019s part of that strategy.\u201d<\/p>\n Libra could still face hurdles. Congressional staff and officials associated with Libra have said the project might be defined as systemically important, people familiar with the matter said.<\/p>\n Should that happen, Libra could get yet another layer of regulation by the U.S. Federal Reserve, which would mean following its rules on equity capital and stress testing.<\/p>\n The Libra Association originally planned to launch its cryptocurrency this year, and Campbell said the technology is already being tested. But solving the regulatory challenges could take much longer, and Facebook has vowed that it won\u2019t stay in the project without U.S. approval.<\/p>\n Facebook Inc. and its partners are considering redesigning the Libra cryptocurrency project so that the network accepts multiple coins, including those issued by central banks, in an effort to woo reluctant global regulators and rebuild momentum for the plan.<\/p>\n","protected":false},"author":341034,"featured_media":310503,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_sma_x_autopost_status":"idle","_sma_x_autopost_error":"","_sma_x_post_id":"","_sma_facebook_post_id":"","_sma_instagram_post_id":"","_sma_threads_post_id":"","_sma_x_attempts":0,"footnotes":""},"categories":[44696],"tags":[191,161,59569],"class_list":["post-341049","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-cryptocurrency","tag-cryptocurrency","tag-facebook","tag-libra"],"_links":{"self":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/341049"}],"collection":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/users\/341034"}],"replies":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/comments?post=341049"}],"version-history":[{"count":1,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/341049\/revisions"}],"predecessor-version":[{"id":341053,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/341049\/revisions\/341053"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/media\/310503"}],"wp:attachment":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/media?parent=341049"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/categories?post=341049"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/tags?post=341049"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Now read:\u00a0Bitcoin drops below $9,000<\/a><\/h3>\n","protected":false},"excerpt":{"rendered":"