Facebook Abandons Synthetic Currency Plan to Save Libra Project
Facing intense regulatory scrutiny and the exit of major financial partners, Facebook's Libra project reportedly shifts to a model based on individual national stablecoins instead of a single synthetic currency.
Facebook shows a willingness to abandon its original plan for a synthetic cryptocurrency tied to a basket of global currencies. David Marcus, the head of the Libra project, tells a group of bankers that the company's main goal is simply to create a better payments system, opening the door to alternative structural approaches for the digital currency.
This strategic reversal comes after national banks criticize the initial plan as a dangerous bypass of regulatory authority and seven major founding members drop out of the Libra Association. The departure of key financial players like PayPal, Visa, Mastercard, eBay, and Stripe strips the project of essential commercial heft and payment processing networks needed for a massive global scale.
To appease regulators, Marcus now suggests issuing a series of stablecoins pegged to individual local currencies, such as a dollar stablecoin or a euro stablecoin, rather than using a single synthetic unit. Despite these major pivots, Facebook still aims for a June 2020 launch, though Marcus emphasizes that the association will not move forward without properly addressing regulatory concerns and securing necessary approvals.