On June 18, 2019, Facebook finally unveiled the Libera white paper, which has one of the most anticipated products in the crypto world for months now with a lot of speculation and reporting on the preparation that has gone into this project. Whenever a new project comes onto the scene with this amount of anticipation surrounding it, it is often because it seeks to disrupt the current systems in place and replace certain institutions. To determine what institutions will be replaced it is usually best to observe the list of partners of the project and see who is deliberately being left out and in this case, it is banks.
The relationship between cryptocurrency and the traditional banking system is a complex one as many see cryptocurrency as the next step towards a future that does not need banks. Banks, on their part, have not been a particularly friendly industry as in certain parts of the world crypto and blockchain firms cannot get access to banking services and so on, though certain banks are slowly adopting blockchain as evidence by JP Morgan's announcement of the upcoming cryptocurrency this year.
Libra And The Banks
When looking at the list of partners call the Libra Association there are a number of payment processors in the such as visa Mastercard and PayPal. Such companies help to write transactions across the world as well as the number of online payment processes such as Stripe and PayU. Even crypto firms such as Coinbase and Anchorage are also partnering with the association along with merchants such as eBay booking.com and so on. However, it is noticeable that there are no banks in the mix and this is a very telling statement.
Many of the Major Banks make billions of dollars from the issuance of credit cards and providing payment services but their business could very well be in jeopardy as we are looking towards a future that allows seamless sending of funds with much lower fees and no middlemen required.
However bank's absence from the list of Libra Association partners may not necessarily have been from their part as they answer to many regulatory bodies and thus, getting involved in a cryptocurrency project could murky the waters especially since a lot of details about the token are not yet public and its implications in terms of regulations across the entire world have not fully been ironed out.
This also speaks to the revolutionary nature of what the Libra Association is going to push which is a token that will be used across the world but without state backing and this could prove to be a challenge for various countries particularly the smaller ones if it becomes widely adopted. Because Facebook has an audience of billions of users and so the Libera coin will definitely see widespread use and ahead of that, Facebook is meeting regulators in various countries and have even hired a lobbyist to make sure regulatory issues do not arise.
Still this project is going against the mold and excluding banks who are the heart of a very complex global financial system and there is bound to be some pushback especially in high places. The white paper has only been out for a short while but the French finance minister Bruno Le Marie has already called on a group of top Central Bank governors and guardians of the global monetary system in order to prepare a report on the Facebook project ahead of their meeting on July. With the amount of potential controversy, this can cause one can understand why banks might want to sit this one out despite its high potential.