Facebook is scaling back its plans for the Libra cryptocurrency after nine months of regulatory scrutiny.
In an updated white paper, released last week, the tech giant outlined how it was dialing down its ambitions to create a single global cryptocurrency.
“The Association has made changes to its initial approach, many of which depart from the approaches taken by other blockchain projects,” Libra’s updated white paper says.
“We appreciate the discussions with policymakers around the world who have helped us understand key concerns so that we can integrate actionable improvements into the Libra payment system’s design and into a phased rollout plan.”
Libra’s initial plan was to circulate a single Libra coin (≋LBR) but discussions with economic regulators caused the Facebook-led Libra Association to scrap that plan in favour of including single-currency stablecoins to the network.
These would be Libra-branded digital currencies (like ≋GBR, ≋USD, and ≋EUR) with those coins’ value pegged to their fiat equivalents.
Although the single-currency ≋LBR coin will still exist, it no longer appears to be a major feature of the system that was intended on simplifying digital currency.
David Gerard, author of cryptocurrency book Attack of the 50 Foot Blockchain, said the new white paper was a sign that Facebook was not going to be allowed to enter the financial market unimpeded.
“Facebook is slowly being dragged, kicking and screaming, to running Libra like an ordinary, compliant payments processor — PayPal, but it’s Facebook — or Libra won’t be allowed to exist,” Gerard said.
“The only interesting things the blockchain parts could do is work around regulations — and there’s no way regulators will let Libra do anything like that.
“Libra was founded on Bitcoin dreams — but none of those aspirations will ever happen, because they contradict everything about how finance works in the real world.”
Regulators have been heavily scrutinising Facebook’s cryptocurrency plans since they were announced mid-last year.
ASIC and other Australian regulators were unimpressed with Libra when they met with ambassadors from Facebook to discuss the cryptocurrency, warning that it “poses many risks and threats” for Australians.
Regulators also sought further assurances that Facebook had actually “considered the Australian regulatory and fiscal environment in the development of these products”.
The Reserve Bank of Australia (RBA) said there was little need for Libra in Australia as our financial needs are well-met served by a financial sector that has become more engaged with digital technologies.
But the RBA did say that regulators should be careful to ensure that private sector stablecoins like Libra “do not fall outside the existing regulatory framework”.
Facebook has not yet announced when Libra will be released.