Facebook has changed its plans for its Libra cryptocurrency projects. Instead of making the public blockchain token, Facebook’s Libra will transition to supporting existing both government-backed currencies.
On the 16th, Libra Association released the whitepaper ‘Libra 2.0.’ The whitepaper indicates that the group is no longer focused on making Libra the basis of a new global financial system. Instead, the Libra project will now focus on creating a more traditional payment network in which coins will be tied to a local ‘stablecoin’ currency.
This significant shift comes after months of massive regulatory pressure and pushback from the government. Indeed the government have expressed its major concerns about the possible damages to the currency sovereignty and financial stability of Libra project, and have put a brake on it ever since. The CEO of Facebook, Mr. Zuckerberg, have since said he would not go forward with the project without regulatory blessing.
Libra seems to be complying with the regulations this time. Instead of terminating the project altogether, Facebook chose to compromise. Not only the association said it would attempt to solve the sovereignty issue by linking the stablecoin to the existing currency, but also it would create multiple coins, each backed by a different national currency (Central Bank Digital Currency “CBDC”).
The association is keeping its consortium network structure. Originally, Libra envisioned a network stability where the public network system is fully verified so that anyone could participate as a node, much like a Bitcoin. However, the regulatory institutions voiced their concerns about hackers and terrorists who might take advantage of its characteristics. As a response, Libra Association scaled back on its plan to publish public blockchain; from now on, only the groups within the association will be able to participate.
Though the project has lost its blockchain attributes in order to comply with regulations, the industry seems hopeful with the release of Libra 2.0. It is expected that the value of public blockchain will be recognized, if the global IT company such as Facebook can demonstrate a successful blockchain project.
The planned launch date for the Libra project was originally set for the end of this quarter but now it’s uncertain. Dante Disparte, the head of policy and communications of Libra Association, told the media that now the aim is to launch the project at the end of the year.
