Facebook’s Libra Isn’t DOA; It Will Move Forward, But Under Threat From Government Stablecoins
While it feels like forever, it’s just been six months since the social media giant, Facebook, announced their stablecoin Libra. The subsequent backlash it’s received is both massive and lengthy. At the moment of writing, it’s unsure whether or not Facebook, along with the Association will even be able to launch Libra.
Typically, if a company were to announce the launch of its own cryptocurrency, the news would have died out within a week of its announcement. Yet, due to the massive size, global reach, and controversies surrounding Facebook, the news brings a much deeper focus on the stablecoin like product.
This isn’t some run-of-the-mill crypto-asset that you buy and sell on exchanges, but a fully developed digital currency and payment system, with assets backed by a basket of fiat currencies.
With initially 28 founding members in the Libra Foundation, the governing body of the developing stablecoin, the group has taken a severe hit as time went on. The number went from 28 down to 21, with massive online transaction facilitators like Stripe, Paypal, Mastercard, and Visa pulling out.
Other companies, like eBay, Booking Holdings, and Mercado Pago, have also pulled out of Libra. While all the companies may be different, they gave more or less the same statement. They said they were busy with internal issues as of this moment and cannot focus on Libra, while also encouraging the stablecoin’s growth. Just to be sure, none of them burned any bridges, in case Libra does launch, and they want a piece of the action.
While Libra was quickly accepted into the corporate world as an easy way to facilitate payments, the governments did not. While some governments gave Libra a fair shot, most have openly opposed Facebook’s budding stablecoin, especially the EU. The French Minister of Finance, Bruno Le Maire, publicly opposed Libra. He stated that issuing of currencies is something that should only be reserved for sovereign states. Both Italy and Germany have joined with France, trying to make Libra incapable of expanding to Europe.
With this new threat of Libra to the government monetary systems, many countries are pushing to adapt. To change the way currencies work to beat Libra in this financial arms race. Que the prospective coins from both the EU and China, who made it clear they’re developing their own stablecoin. Other countries have made it clear that they’re either developing or planning their own.
Libra came out as a supposed “international currency” that would enable cross border transactions, and it could indeed accomplish this. However, it runs the risk of becoming like Bitcoin in the sense that it won’t be the only fish in the sea. Unlike bitcoin, it won’t become the brand of international stablecoins, so it won’t be as lucky as to survive.
At worst, Libra will fail. At best, it will find itself a spot in a growing stablecoin market.