Facebook stands firm on 2020 Libra cryptocurrency launch

Facebook’s cryptocurrency will launch as early as June 2020, Libra Association head Bertrand Perez told a French newspaper on September 13.

Facebook has faced strong resistance from regulators and elected officials around the world, who fear that a fiat-back stablecoin suddenly becoming available to the 2.7 billion users of Facebook’s Messenger, WhatsApp, and Instagram services could threaten global financial stability.

Those concerns are overblown, Perez told Les Echos, saying that “fears about the destabilizing aspect that this reserve could have… do not seem to us to be justified.”

The 28-member association is “firmly maintaining” its plans to launch Libra, “between the end of the first half of the year and the end of 2020,” he said. That gives it a year to work out all the regulatory issues, said Perez. While that will take a lot of work, it should be enough, he suggested.

That’s fairly ambitious, given the fierceness of the pushback from monetary policymakers around the world. Shortly after Libra was announced, U.S. House Financial Services Committee Chair Maxine Waters (D-CA) demanded that work be halted until a regulatory system was in place in the U.S. And on September 12, French Finance Minister Bruno Le Maire promised to block Libra from operating in the European Union.

Aside from the concerns that Libra could outgrow the central bank currencies of even rich nations, the project is suffering from Facebook’s atrocious record on protecting customers privacy, and the distrust is has engendered.

In a U.S. Senate Banking Committee hearing on July 12, Sen. Sherrod Brown (D-OH) memorably said, “Like a toddler who has gotten his hands on a book of matches, Facebook has burned down the house over and over and called every arson a learning experience…It takes a breathtaking amount of arrogance to look at that track record and go, you know what we ought to next? Let’s run our own bank and our own for-profit version of the Federal Reserve, and let’s do it for the whole world.”

Neither Sen. Brown nor Rep. Waters responded to questions by Modern Consensus about Libra’s launch timetable by press time.

It’s only $200 billion

Perez told Les Echos that it is “99% decided” that the basket of fiat currencies backing the Libra stablecoin will include the euro, yen, pound sterling, and Singapore dollar. The U.S. dollar will make up at least half of it, and the Chinese renminbi will be excluded. Those funds will earn interest and be invested in short-term securities from those countries.

This fiat reserve will be held in “a dozen leading banks at most,” added Perez, the managing director and COO of the Libra Association.

He also tried to downplay concerns that this concentration of money will give Facebook—which claims it will have just one vote in the Libra Association—the ability to impact national economies.

The reserve will be as small “a few tens of billions of dollars … and probably no more than 200 billion dollars,” he added. “This is a low figure in the global financial markets of currencies. It is their monetary policies that will influence the Libra through the basket and not the other way around.”

Where to list Libra

Like any self-respecting cryptocurrency, Libra will be listed on the major cryptocurrency exchanges, said Perez.

“Our association will enter into contracts with the main market makers in the crypto universe,” he said. “It will be these market makers who will negotiate contracts with exchanges, which will quote the Libra.”

Cryptocurrency exchange Coinbase was a founding Libra Association member.

In late July, Monex Group Inc., the parent company of Japanese cryptocurrency exchange Coincheck, filed an application to join the Libra Association, as have Tyler and Cameron Winklevoss’ Gemini exchange and the Taiwanese exchange Maicoin.

The Association is looking to grow its current 28 members to 100 by the time Libra launches. Membership costs $10 million, and earns a share of the interest made on that basket of reserve currencies.