Will Facebook's Libra Launch this Year--Or Even at All?

Friday, 07/02/2020 | 08:40 GMT by Rachel McIntosh
  • Eight months after Facebook announced the launch of Libra, the future of the project is still uncertain.
Will Facebook's Libra Launch this Year--Or Even at All?
Libra

In June of 2019, Facebook announced the launch of Libra, a global financial network that it described as "a simple global currency and financial infrastructure that empowers billions of people."

The network--which was originally slated to be launched within the first half of 2020--was to be supported by the Libra Association, an organization comprised of at least one hundred corporate backers who would act as the network's nodes.

However, the project was the focus of quite a bit of pushback--just over a month after the project was announced, David Marcus--one of Libra's co-creators and the head of Calibra, Facebook's wallet platform for Libra tokens--was being grilled by both the United States Senate and the House of Congress.

The United States wasn't the only nation to take aim at the project. Bloomberg reported in August that antitrust regulators in the European Union had begun probing Libra. In December, finance ministers in the EU agreed that private digital currencies like Facebook's Libra should not be allowed in the European Union until the risks they could pose are clearly addressed.

And indeed, David Marcus had already agreed in July that Facebook would not launch Libra until the project had "fully addressed regulatory concerns."

Eight months after the launch of Libra was originally announced, it's unclear if the project any closer to launching. In addition to difficulty with regulators across the globe, a number of the project's backers have left the Libra Association, citing a number of concerns.

However, the presence of Libra on the scene has had powerful effects on the cryptocurrency and fintech industries. Many believe that while Libra may be subdued, the project is still alive and kicking--still, the journey to launching may look different than what the organization had originally planned, starting with its timeline.

Libra likely won't launch this year

Although Libra is still ostensibly planned to launch sometime during 2020, Mark Zuckerberg refused to commit to a 2020 launch in a September interview with Nikkei: "obviously we want to move forward at some point soon [and] not have this take many years to roll out," he said. "But right now I'm really focused on making sure that we do this well."

And it seems that many crypto and fintech industry insiders do not believe that a 2020 launch is in the cards. According to the 106 respondents to The Block's 2020 Outlook Survey--which include representatives from venture capital investing, financial services, and the digital assets industry as a whole – Libra won't launch by the end of the year.

Indeed, 72 (67.9 percent) of them said "no" when asked whether Libra will launch in 2020, while only 34 or (31.1 percent) of the participants said "yes."

Facebook itself even conceded at the end of July last year that the project may never launch--in a quarterly report to the United States Securities and Exchange Commission, the company wrote that "our participation in the Libra Association will subject us to significant regulatory scrutiny and other risks that could adversely affect our business, reputation, or financial results."

Not only is Libra "based on relatively new and unproven technology," the report said, but the laws and regulations around digital currency are also "uncertain and evolving": as a result, "Libra has drawn significant scrutiny from governments and regulators in multiple jurisdictions and we expect that scrutiny to continue," the report said.

"Libra will never launch in its current form."

A number of analysts hold the opinion that Libra will, indeed, eventually launch--but that the project will look different than what was originally planned. "Libra will never launch in its current form," said Anurag Lal, chief executive of internal enterprise messaging service NetSfere, in an email to Finance Magnates.

In addition to the regulatory scrutiny and the exodus of some of the project's backers, Lal pointed out that "Facebook has always lacked accountability and this level of mistrust [among users] has followed suit when it comes to Libra."

Anurag Lal, chief executive of internal enterprise messaging service NetSfere.

Therefore, Mr. Lal believes that if Libra will "likely instead launch as a payment platform that's linked to commerce on WhatsApp, Facebook and Instagram—similar to Venmo and PayPal." And indeed, Facebook did officially launch "Facebook Pay" late last year, a payment platform that Digital Trends described as "Libra Lite."

Gary McFarlane, a cryptocurrency analyst at online investment platform Interactive Investor, also said to Finance Magnates that if Libra does indeed launch, it will be "in a form that differs from the original whitepaper design."

Mr. McFarlane said that the benefits that the project would bring to the company are simply too big to forsake: "Facebook needs to open up more growth vectors, and the digital revolution in money and finance is too big an opportunity to pass up," he explained.

On the other hand, however, Cristina Dolan, chief executive and founder of Blockchain solutions firm InsideCHAINS, pointed out to Finance Magnates that Libra's test net is alive and well: "while some believe that the regulatory hurdles and the large loss of founding partners will prevent Libra from launching in its originally proposed form, it is clear that the Libra test network has been active with numerous projects that have announced support."

And indeed, Libra's development is moving ahead: while a spokesperson for Libra did not comment directly on the project's progress, according to the project's blog, the council of the Libra Association voted to establish a Technical Steering Committee (TSC) pm December 16th to "oversee and coordinate the technical design and development of the Libra network." Another blog post on January 23rd provides more information about full nodes on the Libra network.

Cristina Dolan, chief executive and founder of blockchain solutions firm InsideCHAINS.

Cristina also said that while "it is clear that Libra will morph over time as regulators adjust the criteria of acceptance for digital money," Facebook's ubiquitous global reach could provide the network with a serious advantage when it comes to adoption: "Libra is in a unique position to connect with services and partners that can quickly ignite the network with transactions."

Is this a "positive development for the empowerment of web users or simply a great way for Facebook...to expand market reach?"

Libra may also continue to "morph" as the project's goals become more clear. In fact, Ajay Banga, who has served as Mastercard's chief executive for more than ten years, said that Mastercard's decision to leave the project was based on apparent changes in the way that the fact that the project's initial humanitarian goals don't seem to have remained a priority for Libra.

"It went from this altruistic idea into their own wallet. I'm like: 'this doesn't sound right," Banga told the Financial Times.

Specifically, Banga expressed concerns about Libra's apparent failure to provide a practical network for "financial inclusion": he explained that for him, financial inclusion means a government is able to pay citizens in a certain currency, which must be easy to understand and usable in day-to-day transactions for items such as food.

"If you get paid in Libra [coin] . . . which go into Calibras, which go back into pounds to buy rice, I don't understand how that works," he said.

https://twitter.com/MattGarrahan/status/1224256232514555905

Dr. Brendon Wang, founder of blockchain solution firm Asensys, pointed out to Finance Magnates that "[Although] Libra purports that it will empower billions of people, Libra is designed to make it easier for people to transact using WhatsApp and other Facebook products, which will funnel more value into the tech giant's coffers."

This narrative may not only run counter to the humanitarian light that Libra painted itself in, "this is not the dream of decentralization originally introduced by Satoshi Nakomoto in response to the 2008 Financial Crisis," Dr. Wang said.

"Whether or not Libra launches this year, the bigger question is whether this is a positive development for the empowerment of web users or simply a great way for Facebook and the other members of the Association to expand market reach."

Dr. Brendon Weng, founder of blockchain solution firm Asensys.

Indeed, "Libra is a digital currency that is controlled by a set number of mega-corporations, venture capital firms, and influential non-profits that are members of the Libra Association," Dr. Wang said, arguing that this structure doesn't seem to promote financial inclusion any more than the world's existing economic structures: "this type of governance model is not markedly different from our current economic system where the majority of the power is held by corporate interests."

Banga also expressed concerns over the fact that Libra didn't seem to have a clear business plan: after explaining that there was no apparent path for Libra Association to become profitable or make money from its users, said that "when you don't understand how money gets made, it gets made in ways you don't like."

Libra has highlighted the need for financial inclusion

While the degree to which Libra will promote financial inclusion remains to be seen, the presence of the project has certainly highlighted a global need for financial inclusion and the potential that cryptocurrencies have to address this need.

"Bitcoin has always been part of the 'financial inclusion' discussions, although the ability to convert to fiat currencies has not been an efficient process," Cristina Dolan said, adding that "there are many wonderful stories about bitcoin changing people's lives, for example, women who were able to earn bitcoin as a way to escape their situation."

However, Libra--if it is launched as planned--could have a farther reach than Bitcoin, and could have a correspondingly larger impact. "Some argue that the value [of Libra] to developing nations will be far greater than nations with well-developed payment options," Ms. Dolan continued.

Additionally, "Facebook has the infrastructure to provide capabilities like identification for compliance. Open Banking and PSD2 have done more for financial inclusion, with the ability to offer more than just Payments , than crypto platforms."

Beyond highlighting the need for global financial inclusion, the impact of the project's presence within the fintech and cryptocurrency space has been massive.

"Libra has [has forced] central banks to take crypto, and its potential, seriously."

For one thing, "Libra has served as a great tool for educating regulators," Cristina Dolan said.

"Something as simple as the distinction between centralized versus decentralized control has been a key element within Libra debates." Therefore, "there is a better understanding of why digital money in wallets, that is not held by intermediaries, is very different from the digital representation of value recorded in centralized systems."

Additionally, "The headlines from the recent World Economic Forum in Davos are an indication of the impact of Libra," Ms. Dolan pointed out.

"A new consortium was announced at the Forum with the mission to design a framework for the governance of cryptocurrencies and digital currencies. In addition, several announcements were made around central banks and governments considering digital currencies."

Gary McFarlane argues that, in essence, "Libra has [has forced] central banks to take crypto, and its potential, seriously."

Gary McFarlane, a cryptocurrency analyst at online investment platform Interactive Investor.

"Competition from private money was not something central banks have ever had to think about before," he told Finance Magnates--" indeed, modern central banks were founded to ring the death knell of the private money created by commercial banks."

This has caused "the acceleration of plans for central bank digital currencies, with China likely to seize the lead as it leverages its strengths in fiat digital payments and seeks to challenge US dollar domination of the global financial system," McFarlane said.

The project has also stirred activity in the private sector. "Libra has made other companies dust down their crypto plans that were quietly put away when the bitcoin bubble burst at the end of 2017," McFarlane continued.

"Facebook clearly borrowed from the stablecoins that pre-dated it and now its launch has reacted back on the space, helping to unleash the current stablecoin mania – from JPM Coin to Binance's Venus and a host of gold-backed and fiat-backed stablecoins."

What effects has Libra had on fintech, crypto, and the global discussion on financial inclusion? Let us know your thoughts in the comments below.

In June of 2019, Facebook announced the launch of Libra, a global financial network that it described as "a simple global currency and financial infrastructure that empowers billions of people."

The network--which was originally slated to be launched within the first half of 2020--was to be supported by the Libra Association, an organization comprised of at least one hundred corporate backers who would act as the network's nodes.

However, the project was the focus of quite a bit of pushback--just over a month after the project was announced, David Marcus--one of Libra's co-creators and the head of Calibra, Facebook's wallet platform for Libra tokens--was being grilled by both the United States Senate and the House of Congress.

The United States wasn't the only nation to take aim at the project. Bloomberg reported in August that antitrust regulators in the European Union had begun probing Libra. In December, finance ministers in the EU agreed that private digital currencies like Facebook's Libra should not be allowed in the European Union until the risks they could pose are clearly addressed.

And indeed, David Marcus had already agreed in July that Facebook would not launch Libra until the project had "fully addressed regulatory concerns."

Eight months after the launch of Libra was originally announced, it's unclear if the project any closer to launching. In addition to difficulty with regulators across the globe, a number of the project's backers have left the Libra Association, citing a number of concerns.

However, the presence of Libra on the scene has had powerful effects on the cryptocurrency and fintech industries. Many believe that while Libra may be subdued, the project is still alive and kicking--still, the journey to launching may look different than what the organization had originally planned, starting with its timeline.

Libra likely won't launch this year

Although Libra is still ostensibly planned to launch sometime during 2020, Mark Zuckerberg refused to commit to a 2020 launch in a September interview with Nikkei: "obviously we want to move forward at some point soon [and] not have this take many years to roll out," he said. "But right now I'm really focused on making sure that we do this well."

And it seems that many crypto and fintech industry insiders do not believe that a 2020 launch is in the cards. According to the 106 respondents to The Block's 2020 Outlook Survey--which include representatives from venture capital investing, financial services, and the digital assets industry as a whole – Libra won't launch by the end of the year.

Indeed, 72 (67.9 percent) of them said "no" when asked whether Libra will launch in 2020, while only 34 or (31.1 percent) of the participants said "yes."

Facebook itself even conceded at the end of July last year that the project may never launch--in a quarterly report to the United States Securities and Exchange Commission, the company wrote that "our participation in the Libra Association will subject us to significant regulatory scrutiny and other risks that could adversely affect our business, reputation, or financial results."

Not only is Libra "based on relatively new and unproven technology," the report said, but the laws and regulations around digital currency are also "uncertain and evolving": as a result, "Libra has drawn significant scrutiny from governments and regulators in multiple jurisdictions and we expect that scrutiny to continue," the report said.

"Libra will never launch in its current form."

A number of analysts hold the opinion that Libra will, indeed, eventually launch--but that the project will look different than what was originally planned. "Libra will never launch in its current form," said Anurag Lal, chief executive of internal enterprise messaging service NetSfere, in an email to Finance Magnates.

In addition to the regulatory scrutiny and the exodus of some of the project's backers, Lal pointed out that "Facebook has always lacked accountability and this level of mistrust [among users] has followed suit when it comes to Libra."

Anurag Lal, chief executive of internal enterprise messaging service NetSfere.

Therefore, Mr. Lal believes that if Libra will "likely instead launch as a payment platform that's linked to commerce on WhatsApp, Facebook and Instagram—similar to Venmo and PayPal." And indeed, Facebook did officially launch "Facebook Pay" late last year, a payment platform that Digital Trends described as "Libra Lite."

Gary McFarlane, a cryptocurrency analyst at online investment platform Interactive Investor, also said to Finance Magnates that if Libra does indeed launch, it will be "in a form that differs from the original whitepaper design."

Mr. McFarlane said that the benefits that the project would bring to the company are simply too big to forsake: "Facebook needs to open up more growth vectors, and the digital revolution in money and finance is too big an opportunity to pass up," he explained.

On the other hand, however, Cristina Dolan, chief executive and founder of Blockchain solutions firm InsideCHAINS, pointed out to Finance Magnates that Libra's test net is alive and well: "while some believe that the regulatory hurdles and the large loss of founding partners will prevent Libra from launching in its originally proposed form, it is clear that the Libra test network has been active with numerous projects that have announced support."

And indeed, Libra's development is moving ahead: while a spokesperson for Libra did not comment directly on the project's progress, according to the project's blog, the council of the Libra Association voted to establish a Technical Steering Committee (TSC) pm December 16th to "oversee and coordinate the technical design and development of the Libra network." Another blog post on January 23rd provides more information about full nodes on the Libra network.

Cristina Dolan, chief executive and founder of blockchain solutions firm InsideCHAINS.

Cristina also said that while "it is clear that Libra will morph over time as regulators adjust the criteria of acceptance for digital money," Facebook's ubiquitous global reach could provide the network with a serious advantage when it comes to adoption: "Libra is in a unique position to connect with services and partners that can quickly ignite the network with transactions."

Is this a "positive development for the empowerment of web users or simply a great way for Facebook...to expand market reach?"

Libra may also continue to "morph" as the project's goals become more clear. In fact, Ajay Banga, who has served as Mastercard's chief executive for more than ten years, said that Mastercard's decision to leave the project was based on apparent changes in the way that the fact that the project's initial humanitarian goals don't seem to have remained a priority for Libra.

"It went from this altruistic idea into their own wallet. I'm like: 'this doesn't sound right," Banga told the Financial Times.

Specifically, Banga expressed concerns about Libra's apparent failure to provide a practical network for "financial inclusion": he explained that for him, financial inclusion means a government is able to pay citizens in a certain currency, which must be easy to understand and usable in day-to-day transactions for items such as food.

"If you get paid in Libra [coin] . . . which go into Calibras, which go back into pounds to buy rice, I don't understand how that works," he said.

https://twitter.com/MattGarrahan/status/1224256232514555905

Dr. Brendon Wang, founder of blockchain solution firm Asensys, pointed out to Finance Magnates that "[Although] Libra purports that it will empower billions of people, Libra is designed to make it easier for people to transact using WhatsApp and other Facebook products, which will funnel more value into the tech giant's coffers."

This narrative may not only run counter to the humanitarian light that Libra painted itself in, "this is not the dream of decentralization originally introduced by Satoshi Nakomoto in response to the 2008 Financial Crisis," Dr. Wang said.

"Whether or not Libra launches this year, the bigger question is whether this is a positive development for the empowerment of web users or simply a great way for Facebook and the other members of the Association to expand market reach."

Dr. Brendon Weng, founder of blockchain solution firm Asensys.

Indeed, "Libra is a digital currency that is controlled by a set number of mega-corporations, venture capital firms, and influential non-profits that are members of the Libra Association," Dr. Wang said, arguing that this structure doesn't seem to promote financial inclusion any more than the world's existing economic structures: "this type of governance model is not markedly different from our current economic system where the majority of the power is held by corporate interests."

Banga also expressed concerns over the fact that Libra didn't seem to have a clear business plan: after explaining that there was no apparent path for Libra Association to become profitable or make money from its users, said that "when you don't understand how money gets made, it gets made in ways you don't like."

Libra has highlighted the need for financial inclusion

While the degree to which Libra will promote financial inclusion remains to be seen, the presence of the project has certainly highlighted a global need for financial inclusion and the potential that cryptocurrencies have to address this need.

"Bitcoin has always been part of the 'financial inclusion' discussions, although the ability to convert to fiat currencies has not been an efficient process," Cristina Dolan said, adding that "there are many wonderful stories about bitcoin changing people's lives, for example, women who were able to earn bitcoin as a way to escape their situation."

However, Libra--if it is launched as planned--could have a farther reach than Bitcoin, and could have a correspondingly larger impact. "Some argue that the value [of Libra] to developing nations will be far greater than nations with well-developed payment options," Ms. Dolan continued.

Additionally, "Facebook has the infrastructure to provide capabilities like identification for compliance. Open Banking and PSD2 have done more for financial inclusion, with the ability to offer more than just Payments , than crypto platforms."

Beyond highlighting the need for global financial inclusion, the impact of the project's presence within the fintech and cryptocurrency space has been massive.

"Libra has [has forced] central banks to take crypto, and its potential, seriously."

For one thing, "Libra has served as a great tool for educating regulators," Cristina Dolan said.

"Something as simple as the distinction between centralized versus decentralized control has been a key element within Libra debates." Therefore, "there is a better understanding of why digital money in wallets, that is not held by intermediaries, is very different from the digital representation of value recorded in centralized systems."

Additionally, "The headlines from the recent World Economic Forum in Davos are an indication of the impact of Libra," Ms. Dolan pointed out.

"A new consortium was announced at the Forum with the mission to design a framework for the governance of cryptocurrencies and digital currencies. In addition, several announcements were made around central banks and governments considering digital currencies."

Gary McFarlane argues that, in essence, "Libra has [has forced] central banks to take crypto, and its potential, seriously."

Gary McFarlane, a cryptocurrency analyst at online investment platform Interactive Investor.

"Competition from private money was not something central banks have ever had to think about before," he told Finance Magnates--" indeed, modern central banks were founded to ring the death knell of the private money created by commercial banks."

This has caused "the acceleration of plans for central bank digital currencies, with China likely to seize the lead as it leverages its strengths in fiat digital payments and seeks to challenge US dollar domination of the global financial system," McFarlane said.

The project has also stirred activity in the private sector. "Libra has made other companies dust down their crypto plans that were quietly put away when the bitcoin bubble burst at the end of 2017," McFarlane continued.

"Facebook clearly borrowed from the stablecoins that pre-dated it and now its launch has reacted back on the space, helping to unleash the current stablecoin mania – from JPM Coin to Binance's Venus and a host of gold-backed and fiat-backed stablecoins."

What effects has Libra had on fintech, crypto, and the global discussion on financial inclusion? Let us know your thoughts in the comments below.

About the Author: Rachel McIntosh
Rachel McIntosh
  • 1509 Articles
  • 56 Followers
About the Author: Rachel McIntosh
Rachel is a self-taught crypto geek and a passionate writer. She believes in the power that the written word has to educate, connect and empower individuals to make positive and powerful financial choices. She is the Podcast Host and a Cryptocurrency Editor at Finance Magnates.
  • 1509 Articles
  • 56 Followers

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