Facebook’s Libra currency will launch next year in a limited format

According to three people involved in the initiative, the long-awaited Facebook-led digital currency, Libra, is preparing to launch as early as January, but in an even more limited format than its already downgraded vision.

The 27-strong Libra Association said in April that it planned to launch digital versions of several currencies, as well as a “digital composite” of all of its coins. This followed concerns from regulators about its initial plan to create a synthetic currency backed by a basket of currencies.

However, the association will now initially only launch a single coin backed one by one by the dollar, one of the people said. The other currencies and the composite would be launched at a later date, the person added.

The exact launch date of Libra will depend on when the project receives approval to operate as a payment service from the Federal Financial Market Supervisory Authority, but it could arrive as early as January, the three people said. Finma said she would not comment on Libra’s application, which was initiated in May.

First launched in June 2019, the downsizing of Libra’s vision comes as it has received a skeptical reception from global regulators, who have warned it could threaten monetary stability and become a money laundering hotbed.

While the limited scope may placate wary regulators, critics have complained that the move to single currency coins could affect users looking to convert currencies with additional costs, undermining its ambition to allow for greater financial inclusion. .

Originally launched by Facebook executives, Libra suffered a difficult birth when a wave of its founding members – including PayPal, Mastercard, Vodafone and eBay – stepped down in late 2019 and early 2020 and distanced themselves. from the controversial project.

The association then announced in April that it was reviewing its vision to address regulators’ concerns, limiting its scope and promising additional measures to oversee its system for abuse.

Libra has also been criticized for its close association with the social media network, which has faced multiple privacy scandals.

But several Libra members said they believe the appointment of HSBC’s chief legal officer and former George W. Bush-era financial czar of terrorism Stuart Levey in May, as its first CEO marked a turning point for the project. , as he tried to make himself independent of Facebook.

Since then, a handful of members have competed to build and test their products to launch on the digital currency network when it becomes available.

Among these is Novi, the Facebook subsidiary renamed by Calibra that created a digital wallet to allow Facebook users to hold Libra currency.

One person involved in Novi said the portfolio was “product ready” but would not initially be distributed everywhere, with the company prioritizing “half a dozen high-volume remittance corridors” including the United States and some Latin American countries.

Novi needed its license in every state in the US, the person said, adding that many had been granted but was still waiting “up to 10”, including a New York Bitlicense.

It is unclear how some of the consortium’s main members – such as Uber and Spotify – intend to handle the currency, with some telling the Financial Times they would wait to see how it was received after its launch before investing in cases use. .

The news comes as Bitcoin, the original cryptocurrency, hit record highs of nearly $ 20,000 this week, amid growing interest in digital currencies from professional investors and central banks, and as the coronavirus pandemic accelerated the shift from cash to digital payments.

Meanwhile, PayPal, which was the first founding member to abandon the Libra initiative, announced last month that it would roll out support for cryptocurrencies, including at checkout, with CEO Dan Schulman calling for the shift to forms. digital currencies “inevitable”.

The Libra Association and Novi declined to comment.