CoinDesk talks about the persistence of Libra
Facebook’s Libra was a stablecoin that had the potential to allow anyone, anywhere to transact money over the internet. It was backed by a basket of fiat currencies to ensure price stability and was overseen by a group of 28 varied companies. In 2019, Facebook revealed that Libra users wouldn’t need a Facebook account to send money. The concept combined the promise of cryptocurrencies with the might of Facebook’s social media network, potentially reshaping cross-border remittances and international commerce.
CEO Mark Zuckerberg explained that Facebook was working on two sets of payments-related work during a Congressional hearing in October 2019: building payment systems that allow people to send money on top of the existing financial systems and rethinking what a modern infrastructure for the financial system would be if it was started today rather than 50 years ago on outdated systems, which was what they were trying to do with Libra.
However, legislators worldwide led a backlash against the project, forcing Facebook and its partners to abandon plans for a dividend token, the basket of assets to back the stablecoin, many of its partners, and even its name in a bid to launch something, anything. The project was ultimately sold off to Silvergate Bank, having launched a single (now-defunct) wallet project and not much else.
Facebook, the driving force behind Libra, rebranded to Meta and refocused its efforts on the metaverse, a virtual world effort, which itself is struggling. The various other payments, telecommunications, and other companies that were part of the original coalition have gone back to their normal businesses, though some remain active in the crypto sector.
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Although the project itself never took off, it managed to leave a few enduring legacies from its 958 days of existence: legislative efforts worldwide have been born in reaction to Libra, and crypto in general received a massive boost in mainstream recognition. There’s also the technology underpinning the project, which is being used in multiple projects launched by former Meta employees.
The project may have been doomed from the start, largely due to its association with Facebook, which, at the time, was fresh off the Cambridge Analytica scandal. Almost immediately after it was announced, lawmakers around the world were calling for hearings and investigations.
“I think Libra was met with a giant overreaction around the world,” said Dante Disparte, who was the Libra Association’s head of policy and communications in June 2019. He is now the chief strategy officer at stablecoin issuer Circle Internet Financial. Libra sought permission rather than forgiveness, Disparte said, echoing comments made by both Zuckerberg and David Marcus (one of Libra’s creators) during the project’s early days.
Regulators were hesitant to give permission to the Libra Association, and policymakers were not reassured by the Association’s oversight of the project, considering it a way for Facebook to ultimately gain control. The Libra Association had several payment tech giants as founding members, including Visa, Mastercard, PayPal, Uber, Lyft, Mercado Pago, Booking Holdings, eBay, Stripe, Vodafone, and Kiva. There were also crypto members ranging from blockchain and Xapo to Anchorage Digital and Andreessen Horowitz. The Libra project garnered attention from Congress, with three different full committee hearings focused on it within months of Facebook’s announcement. Companies like Visa, Mastercard, and PayPal ultimately withdrew before the Libra Association was even formally instituted, and lawmakers warned other participating payment firms that they may be subject to greater regulatory scrutiny.
Libra was formally announced in 2019, but rumors of its imminent launch had been circulating for six months. Facebook had been involved in blockchain and crypto technology for over a year. Despite this, Facebook kept quiet about what exactly it was working on, leaving reporters to speculate based on what little information was available. CoinDesk editors were able to hear directly about the project in private briefings with Facebook executives and Libra’s leaders. The project remained shrouded in secrecy, however. The project was complex enough that CoinDesk published five different stories in quick succession covering various aspects of it. In October 2019, a reporter flew to Geneva, Switzerland, to cover the formal creation of the project’s governing council, though that body did not want immediate press coverage.
For a token that never launched, Libra still leaves a massive legacy. Facebook’s involvement helped mainstream the idea of cryptocurrency, propelling what at the time was a relatively staid bear market into broader public awareness. A lot of people were asking what Libra was, which in turn drew them to the question of what crypto was well before it became an everyday term. Crypto “popped onto the public’s radar in a way that it hadn’t before,” according to Zack Seward, an editor at CoinDesk.
Lawmakers have started to discuss cryptocurrency more than before, possibly due to the influence of Libra. This has led to various legislative bodies introducing and passing legislation to address the crypto ecosystem. Some regulators and central banks have also taken more action to address the issues that Libra was seeking to address, according to Disparte.
Before Libra, the concept of central bank digital currencies (CBDCs) was mostly an abstraction. No country had launched a CBDC or was really thinking of digitizing its currency on a distributed ledger. However, now more than 100 central banks are studying CBDCs to some extent.
Furthermore, legislation has been drafted that specifically addresses stablecoins as a subsector of the broader crypto ecosystem. Disparte mentioned the European Union’s Markets in Crypto Assets (MiCA) legislation, which is close to taking effect after years of debate and work.
Disparte believes that Libra was a project that took the brunt of the world’s policy responses, regulatory responses, and public hearings. He also thinks that it was a heat shield that protected against the fear of big tech entering the movement of money.
To learn more, read: Meta to Shutter Novi Crypto Payments Wallet in September, Ending Libra Saga
This article was edited by Ben Schiller and Nick Baker.