The long-awaited Facebook-led digital currency Libra is preparing to launch in January, according to three people involved in the initiative, but in an even more limited format.
The 27-member Libra Association said in April that it had planned to launch digital versions of various currencies, in addition to a “digital composite” of all its coins. This followed regulators’ concerns about their initial plan to create a synthetic currency backed by a basket of currencies.
However, the association would now initially only launch a single dollar-backed coin, one of the people said. The other coins and compound will be released at a later time, the person added.
Libra’s exact launch date would depend on when the project receives approval to operate as a payments service from Switzerland’s Financial Market Supervisory Authority, but it could arrive as early as January, the three people said. Finma said he would not comment on the Libra app, which was started in May.
First launched in June 2019, Libra’s vision reduction comes as it has received a skeptical reception from global regulators, who warned it could threaten monetary stability and become a hotbed for money laundering.
While the restricted scope may appease cautious regulators, critics have complained that a switch to single-currency currencies could affect users looking to convert currencies with additional costs, undermining their ambition to allow for greater financial inclusion.
Originally launched by Facebook executives, Libra suffered a rocky start when a wave of its founding members, including PayPal, Mastercard, Vodafone and eBay, resigned 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 police its system for abuse.
Libra has also been criticized for its close association with the social network, which has faced multiple privacy scandals.
But several Libra members said they believed the appointment of HSBC legal chief and former George W Bush-era terrorism finance czar Stuart Levey in May as its first chief executive marked a turning point for the project as it sought to present itself as independent of Facebook.
Since then, a handful of members have been racing to build and test their own products to launch on top of the digital currency network when it becomes available.
Among them is Novi, The renowned Facebook subsidiary of Calibra that has been creating a digital wallet to allow Facebook users to own the Libra coin.
A person involved in Novi said the wallet was “ready from a product perspective” but would not initially be deployed everywhere, and that the company prioritized “half a dozen high-volume remittance brokers,” including the United States and some Latin American countries.
It’s unclear how some of the consortium’s top members, such as Uber and Spotify, plan to handle the coin, with some telling the Financial Times they would wait to see how it was received after its launch, before investing in use cases. .
The news comes as Bitcoin, the original cryptocurrency, rallied to all-time highs near $20,000 this week, amid growing interest in digital currencies from professional investors and central banks, and as the coronavirus pandemic has accelerated the shift from cash to digital payments.
Meanwhile, PayPal, who was the first founding member to leave the Libra initiative, announced last month that he would launch support for cryptocurrencies, even at the checkout, with Dan Schulman, chief executive, calling the switch to digital forms of coins “inevitable.”