Three months after debuting its Libra cryptocurrency, Facebook has faced a growing chorus of opposition from regulators all around the world. Now, Mark Zuckerberg and co. are struggling to keep the project alive.
Earlier this week, Singapore’s central bank became the latest regulatory body to issue a stern warning over Libra, calling for regulators around the world to develop a coordinated approach to tackling the risks.
“The global regulatory community is coming around to the view that we need a broadly consistent approach,” Ravi Menon, managing director of the Monetary Authority of Singapore, told the Financial Times. “Some of the macro financial risks [it poses] are actually global in nature. It’s not as if one regulator can act on its own.”
Singapore’s call for coordination was more measured than what France and Germany had to say on the matter. Finance ministers from both countries have called Libra an assault on sovereignty and a risk to financial stability.
In the United States, Congress has united in calling for tough scrutiny on Libra over concerns that it may undermine the dollar’s supremacy as worldwide reserve currency.
Facebook Admits Libra Might Never See the Light of Day
Facebook, which originally planned to launch Libra in the first half of 2020, hasn’t been oblivious to growing government opposition. In its latest quarterly filing with the U.S. Securities and Exchange Commission, the social media giant admitted that Libra exposes the company to significant scrutiny that could affect its reputation and financial results.
From the official filing:
“Libra is based on relatively new and unproven technology, and the laws and regulations surrounding digital currency are uncertain and evolving. Libra has drawn significant scrutiny from governments and regulators in multiple jurisdictions and we expect that scrutiny to continue. As a primary sponsor of the initiative, we are participating in responses to inquiries from governments and regulators, and adverse government or regulatory actions or negative publicity resulting from such participation may adversely affect our reputation and harm our business.”
It also seems that some of Libra’s early backers are also getting cold feet. At least three Libra Association members are trying to distance themselves from the project, according to various reports.
Support for Central Bank Cryptocurrency Grows
In acknowledging Libra’s disruptive impact on traditional finance, central bankers are gradually building the case for a national cryptocurrency or an international equivalent that could one day replace the U.S. dollar. The latter is a radical proposal put forward by none other than Mark Carney, the Governor of the Bank of England and former head of the Bank of Canada.
Carney proposed the idea at the Federal Reserve’s annual symposium in Jackson Hole, Wyoming. A global cryptocurrency “could dampen the domineering influence of the U.S. dollar on global trade,” he said.
Meanwhile, a senior official from China’s central bank recently said that the country is “almost ready” to issue its own sovereign cryptocurrency. The People’s Bank of China (PBOC) banned cryptocurrency trading back in September 2017 but has been actively involved in research and development in the space.
Facebook is still trying to launch Libra in as many countries as possible, starting with emerging markets. Given the strong regulatory opposition – or, at least, the call for a coordinated global approach to Libra – timelines for launch could be compromised.