The Libra Association expects to launch its stablecoin next year, although in a limited fashion.
According to a Nov. 27 Financial Times report, Libra will launch in January with just a single dollar-backed stablecoin. The exact launch date depends on when the association receives the Swiss Financial Market Supervisory Authority’s approval to operate as a payments service, which could come in January after the May application.
After postponing its product’s launch for well over two years due to regulatory pressure, the Libra Association started to increasingly scale down and modify its project to appease the regulators. First, the organization started hiring people familiar with traditional finance such as top HSBC executive and Treasury Department official Stuart Levey—who took the lead of the project in May—and former HSBC and Credit Suisse banker Ian Jenkins who was hired as the association’s chief risk officer last month.
The project itself hardly resembles the initial vision of a global currency token backed by a basket of fiat currencies, bonds and other traditionally stable financial assets. In the future, the Libra Association may need to alter its project even further, given that in mid-September some of Europe’s biggest economies urged the European Commission to force the organization to relocate to the European Union or face a ban.
More ominously, the G7 and G20 leaders have said Libra won’t be allowed to launch until at least 2022—the earliest international regulations for a so-called global stale coin could be in place.
What we’ll see launched in January is nothing more than a stablecoin backed by the United States dollar that is very much like the ones already present on the market, except that it is backed by major internet, technology, and finance giants. Still, the report indicates that the Libra Association still intends to launch multiple stablecoins tracking multiple fiat currencies and a separate token backed by those tokens—which seems to be of particular concern to the regulators.
Whether it launches or not, Libra already had a major impact on the worldwide financial landscape and the change that it caused will only increase with time. As Modern Consensus reported earlier this month, Bank for International Settlements’ head of innovation hub admitted that technology firms are forcing central banks worldwide to innovate. He explicitly mentioned Libra and flat out said that it was the real reason why central banks started working on central bank digital currencies:
“The real trigger was the announcement of Facebook’s Libra project, which completely changed the nature of innovation… [Libra] is a global, closed and self-sufficient project since there is at the same time a means of payment, a storage mechanism with a wallet, and a global network which makes it possible to ensure transfers from one place to another without going through the central bank settlement systems.”