In June 2019, Facebook dropped a shocker for the cryptocurrency market, announcing the launch of a cryptocurrency called Libra and also seeking cooperation from large companies such as Visa, Mastercard, and Paypal. Libra has ambitious goals and hopes to become a globally accepted cryptocurrency through cooperation with more enterprises and leveraging Facebook’s huge social platform with more than 2 billion users. However, this plan has created waves, attracting the attention of central banks and regulators in many countries worried about affecting the stability of the financial system.
Currently, there are a lot of cryptocurrencies in the market, but due to price fluctuations, it is difficult to use in daily life. The stablecoins launched by some companies are anchored in price to other assets to keep their prices stable, such as the same US dollar for cryptos like Tether. However, these stablecoins have not been trusted by the public, preventing the use of cryptocurrencies in daily life.
However, when Facebook announced the Libra plan, it’s opportunity to be widely used in life compared to other cryptocurrencies was apparent due to its large number of users and cooperation with a number of large enterprises. As stated in Libra’s white paper, the vision of the plan is to enable people around the world, especially where the financial system is immature, to enjoy low-cost financial services and build currency and financial infrastructure without borders.
The price of Libra is backed by low-volatility assets, including major currencies such as the US dollar, euro, British pound, Japanese yen, and Singapore dollar, as well as some low-risk bonds. However, Libra functions as a legal currency, causing central banks and regulators in many countries to worry that it will impact the financial system. Due to the anonymity of cryptocurrencies, it may be used by criminals for money laundering or terrorist financing.
The U.S. Senate held a hearing in July, inviting project leader David Marcus to attend and be questioned by senators. At the meeting, many Democratic and Republican senators bombarded the launch of Libra, which may cause a large number of user privacy leaks. The problem is more opportunities to divide American society. The People’s Bank of China, the Bank of Japan, and the European Union have also voiced their concerns about Libra’s development and the need to comply with the regulatory regulations of various countries. The European Commission has also reportedly launched antitrust investigations.
Suddenly, multinational governments attacked, and Facebook founder Zuckerberg also stated that Libra will not be officially launched until it communicates clearly with regulators and the public. This cryptocurrency originally appeared in the first quarter of 2020, but under pressure, it has delayed its launch to the next quarter. At the same time, the Libra Committee, which originally consisted of 28 companies and institutions, has only 21 remaining. The aforementioned large payment companies such as Visa, Mastercard, and Paypal have withdrawn from the Committee because of concerns about the regulatory risks brought by participating in the project. Without the participation of large payment companies, Libra will encounter more obstacles in the future.