Facebook, the social media giant, started Libra with the motto of banking the unbanked across the globe. After Libra was announced, the entire crypto industry was filled with mixed emotions. Despite a quick start things slowed down really quickly as regulators started pinning down Libra development.
The biggest hit that Libra took in its uncomfortable journey so far was losing seven of its original backers at the beginning of October. The first to abandon Libra was leading U.S payments giant PayPal. The company said that it would forgo any further participation in the affairs of the Libra association and focus on its own core business.
This move was soon followed by other major Libra backers like Visa, Mastercard, Stripe, eBay, Mercado Pago and Booking. Each entity cited various regulatory concerns as the sole reason to back out of the Libra association. A spokesperson from Visa had then said:
“Our ultimate decision will be determined by a number of factors, including the Association’s ability to fully satisfy all requisite regulatory expectations.”
Those that remained associated were under immense pressure from Senators Brian Schatz (D-HI) and Sherrod Brown (D-OH), who warned about enormous risks around the launch and expansion of the Libra. Steven Mnuchin Treasury Secretary even called it a national-security concern.
Facebook Losing faith
Libra had no chance of launch in India or China, and its development was completely blocked by France and Germany. Recent reports revealed that a draft document from the European Central bank that was to be discussed at the E.U finance ministers meeting, stated that Libra “should not begin operation in the EU” until every regulatory compliance is met.
What’s more ridiculous was the fact that Facebook CEO Mark Zuckerberg said in a testimony on October 23, that
“I want to be clear: Facebook will not be part of launching the Libra payments system anywhere in the world until US regulators approve.”
Facebook Pay and not Libra
Now, Facebook is venturing into a more traditional payments system as the company announced on November 12 that it will be introducing Facebook Pay, a new payments system that will facilitate payments across Facebook, Messenger, Instagram, and Whatsapp and is quite similar to PayPal’s venomo app.
VP of marketplace and Commerce at Facebook, Deborah Liu said:
“People already use payments across our apps to shop, donate to causes and send money to each other. Facebook Pay will make these transactions easier while continuing to ensure your payment information is secure and protected.”
In order to avoid further regulatory scrutiny, the announcement also mentioned that Facebook Pay is “built on existing financial infrastructure and partnerships.” The announcement further states that Facebook Pay will not be related to the “Calibra wallet and the Libra network,” project in any way.
The new application will start rolling out this week itself on all Facebook’s social applications in the United States for “fundraisers, in-game purchases, event tickets, person-to-person payments on Messenger and purchases from select Pages and businesses on Facebook Marketplace.” Facebook promises to bring this new payments system to more people and places in the future.
As of now, it looks like Ripple CEO Brad Garlinghouse was somewhat right about being a sceptic towards Facebook’s stablecoin. He had said:
“I would bet that Libra…let’s say, by the end of 2022, I think Libra will not have launched.”