Facebook’s Libra project: where do we stand?

Facebook’s Libra project: where do we stand?
Written by:
Michael Harris
17th May, 15:47
  • Facebook’s Libra amended its whitepaper last months in another attempt to win the approval from regulators
  • Stuary Levey, previously the Chief Legal Officer at HSBC, agreed to become the first CEO
  • Singapore’s investment giant Temasek becomes the first state-owned company to join the Libra Association
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Facebook’s own digital coin project – Libra – was introduced as a new global payment system where each Libra token would be supported by several traditional currencies. The Libra Association released an updated whitepaper last month, announcing its plan to launch several stablecoins, each stablecoin backed by a single nation’s currency, in an attempt to appease regulators. 

After Visa, Mastercard, eBay, Stripe, and Mercado Pago have all withdrawn from the Libra project, many people believed that Facebook’s plans for a globally-distributed cryptocurrency were quashed. 

As the community still expects the first Libra tokens to be ready later this year, we now take a look at the latest developments concerning Libra. 

Levey agrees to run Libra project

The Libra project received a much needed boost last week after it was announced that the HSBC executive Stuart Levey has agreed to join Libra Association as the first CEO. His vast experience in international finance regulation will be of paramount importance for Libra as it fights to receive a green light from the regulators. 

“Stuart brings to the Libra Association the rare combination of an accomplished leader in both the government, where he enjoyed bipartisan respect and influence, and the private sector where he managed teams spread across the globe,” said Katie Haun, a Libra Association board member.

“This unique experience allows him to bring a wealth of knowledge in banking, finance, regulatory policy and national security to the Association and strike the right balance between innovation and regulation”. 

Levey is the former US finance foreign policy chief whose last position was a Chief Legal Officer at the HSBC bank. In the past, he also held the role of the head of the US Treasury’s department overseeing terrorism and national security.

Temasek becomes the first state-owned firm to back Libra

As Invezz reported a few days ago, one of the biggest investment companies in the world –  Temasek – decided to back the Libra Association, becoming the first Asia-Pacific member involved in the Facebook-led project. 

Temasek’s decision to join the project comes as the Libra Association attempts to get past regulatory and legal hurdles after the project faced resistance from global regulators and lawmakers which caused several prominent supporters such as Visa, Mastercard and Paypal to abandon the project. 

“Temasek’s efforts to support and advance the use of blockchain technology across a range of use cases, asset classes and sectors, reflects its drive to explore, develop and invest in solutions to bring about a better, smarter, and more sustainable world,” the Libra Association said in a statement after Temasek joined the project.

Global regulators have grilled the Libra Association over its original vision, raising concerns that its new payment system could become very appealing for money launderers.

Besides becoming the first Asia-based member, Temasek is also now the first state-backed investor to join the project. Singapore is acknowledged to be the heart of financial technology in Asia, whose government provided significant support for fintech. 

“Blockchain technology can play a transformative role in payments networks by enhancing cost efficiencies, creating new business opportunities and accelerating financial inclusion,” said Temasek International deputy director Chia Song Hwee.

“Our participation in the Libra Association as a member will allow us to contribute toward a regulated global network for cost-effective retail payments.”

Temasek decided to back Libra, despite receiving cautious feedback over Facebook’s project from the chief of Singapore’s central bank in 2019. 

Last year, Managing Director of the Monetary Authority of Singapore, Ravi Menon, managing director of the Monetary Authority of Singapore, said Libra posed a financial threat that should be regulated.

Director of research company Kapronasia, Zennon Kapron, said Libra faced many regulatory obstacles when it was first introduced, however, the updated white paper attempts to address many of those problems.

“The new version of the Libra white paper aims to correct a lot of those issues,” he said, adding it was unlikely that Temasek would join a project the MAS did not approve of. “With Temasek being the first Asian member, it could help cement Singapore as a fintech hub if the project is successful.”

Apart from Temasek, digital currency investor Paradigm and private equity group Slow Ventures are also the new Libra supporters, amounting to a total of 27 members. Current Libra backers include US venture capital company Andreessen Horowitz, media services provider Spotify, e-commerce platform Shopify, as well as ridesharing companies Uber and Lyft.

Fake Libra scams persist

Despite all changes and whitepaper amendments, Libra’s issues with fake token are still persistent from the original launch date. These scams are based around the fake Libra tokens that are not associated with the original Libra association.

“As we become aware of these sites, we work diligently to address them. We respond to inquiries concerning the validity of these pages, indicating that the only official website is Libra.org,” Dante Disparte, Deputy Chairman and Head of Policy and Communications for The Libra Association said. 

“We encourage people to report sites they deem as scams, by alerting us at [email protected]

What’s interesting is that many of these scams appeared on Libra parent company’s website Facebook. One of these scams was trying to organize a fake Initial Coin Offering (ICO). 

Summary

One year after it was launched, the Libra Association is still fighting to close numerous sales of fake Libra tokens. The company may be better positioned in this regard, as well as it any other aspect, after hiring Stuary Levey.

A well-respected financial executive  agreed to become the first CEO of the project. His experience in international finance regulation and connections with the administration and regulators are expected to help Libra receive a green light from the regulators. 

Moreover, Temasek, one of the world’s largest investment firms in the world, joined the Libra Association and therefore becoming the first state-backed investor to join the project. 

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