Facebook Calibra to Support Both Crypto and State-Issued Currencies
- Facebook’s Libra project could be overhauled to accept multiple coins
- The move is designed to appeal to reluctant US regulators and rebuild momentum for the coin
- Libra’s original plan to provide a global currency for the unbanked is still underway, with new partnerships with Spotify and Tagomi Trading
On March 3, 2020, Facebook revealed possible plans to re-design the Libra project so that the network accepts multiple coins, including some issued by various central banks. This is thought to be an effort to entice reluctant financial regulators in Europe and the US and reinvigorate momentum for the project.
When Facebook, Inc. unveiled the Libra project, the social media giant stated that it mainly developed Libra to create a single global digital currency. The project was specifically targeting the 1.7 billion people who are unbanked in a bid to help them send money anywhere easily and at little cost.
Unfortunately, the idea quickly ran into a wall of opposition, which has resulted in Facebook and the Libra Association looking to reorganize the coin to be mostly a payments network that operates with multiple digital coins, including those issued by central banks and backed by the US dollar, the euro, and other major fiat currencies.
That said, the dream of a single global coin isn’t completely finished, as the planned overhaul of Libra will likely expand the original vision of the digital token.
Payments network VS. Single Global Cryptocurrency
If the revamped Libra project takes shape as more of a payments network than a single, global digital coin, the average user might not see much difference between Libra and other existing payments systems run by Moneygram, Paypal or any other financial remittances companies that aim to move money around the world effortlessly.
The Libra coin was originally envisioned to be created from a collection of relatively stable assets such as national fiat currencies, along with debt instruments that would support the coin.
However, trouble quickly struck when US lawmakers said they didn’t trust Facebook to manage a financial network after repeated failures to protect user info. The regulators also argued that Libra coin would be a threat, as it could undermine the sovereignty of national fiat currencies globally.
The Road Has Been Bumpy For Libra
The Geneva-based Libra Association currently has 20 of the original 28 members after many of its most prominent members, including Visa and Mastercard, abandoned the project late last year. However, the project has gained momentum lately, adding cloud-based Canadian commerce startup Shopify Inc and the crypto trading platform Tagomi Trading LLC in the past few weeks.
That said, the Libra Association is concerned that their project could fail to take off if the SEC could rule that a token backed by a basket of currencies is a security, which is a tradable financial asset.
Such a ruling would mean that the Libra coin would have to comply with a slew of disclosure requirements and enforce the same strict restrictions that the financial regulator places on stocks, effectively damaging the digital coin’s usability.
Featured image courtesy of Shutterstock.