From the project’s inception, Facebook has rallied support from over a dozen firms spanning the sectors of finance, e-commerce, technology, and telecommunications. Nevertheless, uncertainties loom due to resistance from both regulators and digital currency proponents, challenging the eventual debut of Libra—if it materializes at all.
Libra, touted as an extensively-discussed digital currency by Facebook, is poised to operate within its virtual ecosystem. The aim is to position Libra as a ‘stablecoin’ anchored to a combination of global currencies, including the US dollar, Euro, and Yen. Industry powerhouses, such as Mastercard and PayPal, have allied as corporate backers and Libra project sponsors. However, regulatory bodies, notably in the EU and US, express unease about the possible implications of Libra, potentially jeopardizing its release.
Giants in the credit card industry, such as Visa, Inc., initially committed approximately $10 million for Libra investment; however, Visa announced its withdrawal on October 4th, 2019. The Wall Street Journal indicates that Visa and Mastercard are reevaluating their Libra partnership.
Enthusiasts have long anticipated the entry of significant social media entities like Facebook into the cryptocurrency arena since the start of the digital currency revolution nearly two years ago. Reports suggest Facebook has invested over a year in Libra’s development, though public information remains scant. It is confirmed that Libra will be tied to a blend of government-backed currencies, a strategic move to counteract the drastic fluctuations that have afflicted other digital coins.
Facebook’s current pursuit of a digital currency may seem unconventional. In 2017, fervor over Bitcoin and similar tokens triggered price surges and a cascade of investments. However, stringent regulatory policies in the U.S. and globally continue to pose significant challenges, alongside persistent apprehensions regarding cryptocurrencies’ potential role in money laundering and terrorist funding.
Layering protective measures, Facebook has distanced itself from Libra’s direct control. Neither Facebook nor the consortium’s affiliates, under the banner of the Libra Association, will exert direct control over the digital coin. Nonetheless, they might contribute to the Libra payments network’s evolution by functioning as nodes for transaction validation. Facebook’s cautious stance is no surprise, given the mounting pressure to address regulatory challenges linked to its burgeoning cryptocurrency. Vice President of the EU Commission, Valdis Dombrovskis, recently aired financial stability concerns tied to Libra, while the Trump administration cited national security risks. ECB board member Benoit Coeure remarked on the serious risks concerning public policy priorities, emphasizing the high threshold for regulatory approval. Meanwhile, French Finance Minister Bruno Le Maire expressed a definitive stance against Libra’s development within the EU.
Addressing fears, co-creator of Libra, David Marcus, reached out via Twitter. “There’s been excessive discourse on Libra’s potential threat to monetary sovereignty. I aim to dispel that myth,” he stated. “Libra involves no new money creation, a privilege reserved for sovereign states.”
Facebook, globally recognized for its social media influence, introduces Libra, a digital coin enabling peer-to-peer transfers among its users. Additionally, it facilitates purchases both on the Facebook platform and broadly across the internet.
The emergence of cryptocurrency has peaked interest across the globe. As of 2022, over 12,000 cryptocurrencies exist in the market, with Bitcoin dominating at a market share of approximately 43%. Concurrently, the global blockchain market is projected to reach over $23 billion by 2023.
