NurPhoto | Getty Images
The long-awaited Facebook-led digital currency scales are preparing for launch in January, according to three people involved in the initiative, but in an even more limited format than their already downgraded vision.
The 27-strong Libra Association announced in April that it was planning to introduce digital versions of multiple currencies as well as a "digital composite" of all of its coins. This followed regulatory concerns about their original plan to create a synthetic coin with a basket of currencies.
However, the association would now initially only bring a single coin on the market, which is one-to-one supported by the dollar, said one of the respondents. The other currencies and the federation would be introduced at a later date, the person added.
The exact start date of the Libra depends on when the project is approved by the Swiss Financial Market Authority as a payment service provider, but it could happen as early as January, the three people said. Finma said it would not comment on Libra's motion, which was initiated in May.
First launched in June 2019, Libra's vision will be scaled down as it was received with skepticism by global regulators, who warned that they could jeopardize currency stability and become a hotbed for money laundering.
While the restricted scope could appease cautious regulators, critics have argued that switching to coins in one currency could hit users who wish to convert currencies at an additional cost, undermining their desire for greater financial inclusion.
Libra was originally launched by Facebook managers and suffered a difficult birth when a wave of its founding members – including PayPal, Mastercard, Vodafone, and eBay – left in late 2019 and early 2020, distancing themselves from the controversial project.
The association then announced in April that it would revise its vision to address regulators' concerns, narrow its scope and promise additional measures to monitor its abuse system.
The Libra had also come under fire for its close association with the social media network, which has faced multiple privacy scandals.
However, several Libra members said the appointment in May of HSBC legal chief and former George W. Bush-era tsar Stuart Levey as chief executive was a turning point for the project as it set itself apart wanted from facebook.
Since then, a handful of members have tried to build and test their own products to get them over the digital currency network when it goes live.
Among them is Novi, the Calibra-renamed Facebook subsidiary that created a digital wallet that Facebook users can use to keep the Libra currency.
One person involved in Novi said the wallet was ready "from a product standpoint" but would not be rolled out everywhere initially, with the company prioritizing "half a dozen high volume remittance corridors" including the US and some Latin American countries.
Novi needed its own license in each state, the person said, adding that she had been granted many, but they were still waiting for "up to 10" – including a New York bit license.
It remains unclear how some of the consortium's key members – like Uber and Spotify – plan to use the currency, and some tell the Financial Times that they would wait and see how it came in after its launch before investing in use cases.
The news comes as Bitcoin, the original cryptocurrency, hit a record high of nearly $ 20,000 this week as professional investors and central banks' interest in digital currencies increased and the coronavirus pandemic accelerated the shift from cash to digital payments.
In the meantime, PayPal, which was the first founding member to leave the Libra initiative, announced support for cryptocurrencies, including at the checkout. Dan Schulman, managing director, called for the switch to digital currency forms. "Inevitable."
The Libra Association and Novi declined to comment.
© 2020 The Financial Times Ltd. All rights reserved. No redistribution, reproduction or modification in any way.