Facebook Finally Decides to Scale Back Its Libra Cryptocurrency Plans After Constant Regulatory Backlash
After much regulatory backlash and pressure for nearly a year, social media giant Facebook has finally decided to scale back its Libra cryptocurrency project. On Thursday, April 16, Facebook and its partner companies in the Libra Association said that they will no longer move ahead of making the Libra cryptocurrency as the basis on the financial system.
Earlier, when Facebook announced its Libra plans in June 2019 with 27 other organizations, it planned to launch its Libra cryptocurrency by leveraging its massive 2.5 billion monthly-active users.
However, Facebook had to ruffle its feathers with the regulators from the U.S. and other major economies. over the last few months. Besides, regulators raised some serious concerns of Facebook’s ability to handle user-date and privacy after the 2018 Cambridge Analytica scandal.
Ultimately, Facebook has now decided that the Libra project will focus on creating a traditional payment network by tying the Libra coins to a local currency, reported the New York Times.
The Libra Association, which is a Swiss-based group said that these shifts were owing to the global outpour and opposition to its digital currency. Thus instead of having a single coin backed by a mix of currencies and securities, Libra will be split in a series of “stablecoins” each of which is connected to a fiat currency.
In order to avoid any conflict with the regulators, several prominent members like Visa, PayPal and MasterCard have left the Libra Association. Well, Facebook is still making every effort to proceed ahead with this issue.
Dante Disparte, the vice chairman and head of public policy at the Libra Association, said: “The feedback is not at all in vain, including the criticism. What we are trying to demonstrate is that it is now being incorporated in the project.”
The Libra Association that is based out of Switzerland, said that it has received the necessary approval from the Swiss Financial Markets Supervisory Authority, for having its own payment network.
While some top financial giants left the Libra Association, some more popular companies like e-commerce giant Shopify and financial firm Tagomi have joined the association recently.
Recently, the G20 regulator also said that it has to setup some ground rules before it allows private players like Facebook to release their stablecoins in the market. The FSB has also given recommendations suggesting the supervision, oversight, and regulatory challenges posed by global stablecoins.