According to three individuals involved in the initiative, Facebook’s digital currency project Libra will launch in 2021–but it will be a watered-down version of what the 27 member Libra Association was planning to roll out.
In early 2021, you can expect Libra to launch a stablecoin that is backed 1 to 1 with the US dollar. The exact launch date is unknown at the moment because the Geneva-based Libra Association is waiting for approval from the Swiss Financial Market Supervisory Authority.
However, what the Libra Association was really hoping to launch was a stablecoin that was pegged to a basket of fiat currencies. However, the association received backlash from regulators around the world who were worried that the product that Libra envisioned could pose a significant threat to the financial stability of the underlying fiat currencies in the basket.
Obstacles ahead
Although the Libra Association will most likely receive clearance to launch their stablecoin, it is not all smooth sailing for the project.
An individual from the Novi team–the digital currency wallet that will allow users to hold Libra-issued assets–said that the Novi wallet is “ready from a product perspective” but faces administrative barriers. Initially the Libra stablecoin will only be available in “half a dozen high-volume remittance corridors” such as the US and a few Latin American countries.
But in the United States, Novi needs a license from each state that it plans to operate in. According to the member of the Novi Team, Novi is still waiting on up to 10 states to give them a license to operate–including New York and the Bitlicense.
Another Stablecoin?
Considering that there are a variety of stablecoins backed by the USD dollar–USDC, DAI, and USDT (Tether) to name a few–Libra will have to compete with several better-known incumbents.
Although Libra’s first product launch will be its stablecoin, the team at the Libra Association is hoping that they can launch the product they originally envisioned sometime in the future.
Update (11:23 am EST)
The Libra Association has changed its name to ‘Diem Association’ and the Libra digital currency will also be called ‘Diem’
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