Even though Facebook’s Libra project may still be months — or even years — away from launch, this hasn’t stopped the stablecoin from dominating conversations at the highest levels of global finance. While cryptocurrencies like bitcoin have long presented a vague, if largely hypothetical, challenge to the authority of central banks and government regulators, the privately controlled Libra is increasingly seen by those groups as a serious, urgent threat to the monetary status quo. As a result, Libra has been making a lot of headlines in recent weeks.
In this post, we’re taking a look at seven recent news items about Facebook’s controversial stablecoin project.
1. Major payment firms exit Libra Association. Earlier this month, PayPal became the first major payment provider to withdraw from the Libra Association, the stablecoin project’s governing body. This high-profile departure would be the first of many, with Visa, Mastercard, eBay, Stripe, Mercado Pago, and Booking Holdings also backing out of the Libra Association this month. Multiple news outlets have reported that stronger-than-expected regulatory pushback, particularly in the E.U., appears to be the major motivation for these departures.
2. Libra Association forms board, adopts governance structure. The remaining members of the Libra Association met in Geneva, Switzerland, earlier this week to vote on the organization’s board and to establish its interim bylaws. The five-person board of directors includes Calibra CEO (and former Facebook executive) David Marcus, Andreessen-Horowitz general partner Katie Haun, Xapo CEO Wences Cesares, PayU general counsel Patrick Ellis, and Kiva executive Matthew Davie. A total of 21 organizations have formally joined the Libra Association, including well-known companies like Uber, Lyft, Coinbase, and Spotify.
3. U.S. Congressman says Facebook should adopt bitcoin. In an interview with the Noded Bitcoin podcast earlier this month, Rep. Warren Davidson (R-OH) blamed Libra’s regulatory challenges in the U.S. on lawmakers’ general distrust of Facebook. The social media giant has come under intense criticism for its handling of private user data, particularly in political advertising. Davidson said that adopting bitcoin as a payment system would be a “way better idea” for Facebook than trying to launch a new, privately controlled token.
4. U.S. Treasury Secretary says Libra losing partners because it is “not ready” for regulators. Speaking on CNBC earlier this week, U.S. Treasury Secretary Steven Mnuchin said that Libra’s planners are “not ready” and that their governance structure is “not up to par” when it comes to meeting U.S. and international anti-money-laundering standards. Mnuchin suggested that this was likely a key reason that many major payment firms have recently left the project.
5. G7 group to release deeply critical report on Libra and other stablecoins. Earlier this week, finance ministers and central bank heads of the G7 nations announced plans to release a new report assessing the opportunities and challenges presented by Libra and other stablecoins. According to the BBC, the draft version of the report outlines nine major risks to the global economic system created by stablecoins, and states that “no stablecoin project should begin operation until the legal, regulatory and oversight challenges and risks are adequately addressed.”
6. Sweden’s central bank chief calls Libra a “catalytic event” for the global banking system. In an interview with CNBC’s “Squawk Box Europe” earlier this week, Riksbank governor Stefan Ingves called the creation of Libra an “incredibly important catalytic event” for central banks. While clearly wary of the disruption Libra and similar tokens could cause, Ingves was also somewhat supportive of the innovation, calling its creation a near-unprecedented event in global finance that is already reshaping Sweden’s approach to digital currency.
7. Banking app Current sues Libra over logo. Late last week, lawyers representing online banking app Current filed a lawsuit in the Southern District of New York claiming that the logo used by Facebook’s Calibra is “virtually identical” to their trademarked logo. (Calibra is a division of Facebook dedicated to developing Libra’s source code and wallet software.) The case isn’t exactly clear-cut, however, as Current filed its logo trademark application more than a week after Libra’s official reveal. Further complicating the issue, both logos were created by Character, a San Francisco-based branding firm. The case is expected to be settled out of court.