Facebook is willing to reverse course on its plans to tie its digital currency project to a synthetic currency tied to a basket of global currencies.
Reuters is reporting that Facebook’s head of the Libra project, David Marcus, told a group of bankers that the company’s main goal was to create a better payments system and was open to alternative approaches to the original structure of the project.
Facebook and its partners had intended to create its cryptocurrency by pegging it to a basket of national currencies whose holdings would be set by the Libra Association.
National banks considered the plan part of a dangerous end-run around their regulatory authority and have been holding up the project until they could assume tighter control over how the Facebook-architected cryptocurrency and payment technology would operate.
The scrutiny from regulators proved too much for some of Facebook’s largest, and earliest, partners in the Libra Association, whose members would determine how the cryptocurrency would operate.
In the past month seven of the Libra Association’s founding members dropped out including: PayPal, Mastercard, Visa, Ebay, and Stripe. Those seven represented a big chunk of the strategic value and commercial heft of the planned association, with Stripe, Mastercard, Visa, and Ebay standing in for a huge number of payment processors and merchant touchpoints that the new cryptocurrency would need were it to dramatically scale to the size Facebook wanted right out of the gate.
Now, in another strategic reversal, Marcus is conceding the synthetic currency in favor of stablecoins tied to the local currency in each market that Libra would operate.
“We could do it differently,” Reuters quoted the Libra Association chief as saying. “Instead of having a synthetic unit … we could have a series of stablecoins, a dollar stablecoin, a euro stablecoin, a sterling pound stable coin, etc.”
All of this is happening against the backdrop of Facebook’s stated launch date of June 2020 for the Libra cryptocurrency. Marcus told Reuters that the June launch was still the goal, but that the association would not move forward unless it had addressed the concerns of regulators and received the proper approvals.
Those approvals are becoming harder to come by as the regulators who overseen global monetary policy cast a more skeptical eye at on stablecoins as well.
Reuters reported that the G-20 financial overseers wrote in a statement that money laundering, illicit finance and consumer protection need to be evaluated before any stablecoin projects can “commence operation.”