The hierarchy at Facebook is reportedly alive to the possibility that its flagship cryptocurrency project, Libra, may not get off the ground. Financial regulators and government authorities in multiple jurisdictions have expressed concerns over the possible launch of the digital currency.
Some commentators say the social media giant should jettison its plans for a bespoke digital payment gateway in favor of acquiring a company like Square that has already had great success in obtaining relevant regulatory clearances.
Regulatory Hurdles May Prove Insurmountable for Libra
Facebook has come out to issue a dire warning that the Libra project may not take off following the current state of the regulatory climate for cryptocurrency businesses. In its recently released quarterly report, the social media behemoth said it had plans to launch Libra in 2020 but such designs may not see the light of day.
An excerpt from the company’s filing with the U.S. Securities and Exchange Commission (SEC) reads:
“Libra has drawn significant scrutiny from governments and regulators in multiple jurisdictions and we expect that scrutiny to continue. In addition, market acceptance of such currency is subject to significant uncertainty. As such, there can be no assurance that Libra or our associated products and services will be made available in a timely manner, or at all. We do not have significant prior experience with digital currency or blockchain technology, which may adversely affect our ability to successfully develop and market these products and services.”
As previously reported by Blockonomi, there has been massive regulatory pushback against the Libra project since Facebook released the white paper. Almost everyone from members of the U.S. Congress to regulators in Europe, Asia, and Africa have expressed concerns over the project.
Libra was even the subject of Congressional hearings as lawmakers sought to gain a better understanding of the industry. U.S. Treasury Secretary Steve Mnuchin and even the country’s President Donald Trump weighed in with negative comments about the project.
Facebook Keen on Trying Nonetheless
Facebook for its part says it will the necessary steps to gain regulatory approval for Libra. The company highlighted the changing regulatory environment for the digital sphere which places more burden on tech companies to prove that their products do not pose systemic risks.
Company CEO Mark Zuckerberg even spoke about Facebook’s commitment to scaling all the regulatory hurdles saying:
“The approach on all of these fronts is to outline the ideas and the values that we think an eventual service should have, leave open a period of however long it takes to address regulators and different experts and constituents’ questions about this and then figure out what the best way to move forward is.”
Meanwhile, some stakeholders in the U.S. believe that regulatory conditions in the country are net negative for America’s place in the emerging digital landscape. Critics of the patchwork of rules and guidelines say innovation is being driven away from the U.S. to other jurisdictions with fairer cryptocurrency and blockchain technology laws.
CNBC Analyst Says Facebook Should Abandon Libra for Circle
Given the magnitude of the regulatory hurdles set before Facebook in launching Libra, some commentators say the company would do well to abandon the project and focus on other less controversial digital payment methods.
Earlier in July, CNBC’s Jim Cramer advised the company to ditch Libra and instead acquire Jack Dorsey’s Square. Rather than trying to build a digital payment system, Cramer says Facebook should buy Square and expand the company’s operations.