Facebook scales back cryptocurrency Libra following frosty reception from regulators

Social media titan Facebook announced yesterday it is scaling back plans for its cryptocurrency, Libra.

The change in direction comes after financial regulators were concerned that it could make governing money more difficult.

Initially when it was announced in June 2019, Facebook and Libra had planned to offer a single global currency backed by government debt and currencies, like the US dollar and the Euro.

When launching Libra back in mid-2019, Mark Zuckerberg, CEO of Facebook, wrote: “Libra's mission is to create a simple global financial infrastructure that empowers billions of people around the world.”

Regulators were concerned that the introduction of a cryptocurrency available to all of Facebook’s 2.5bn users could make money laundering easier and undermine central banks.

Significant changes to the payment option include Libra now creating single currency-backed stablecoins (as opposed to one universal currency), introducing anti-money laundering and anti-terrorism sanctions and to increase protections for users in the form of the Libra Reserve.

The company also says it will register with the US Treasury’s Financial Crimes Enforcement Network as a ‘money services business’ which will mean it has to report more diligently and enhance record-keeping systems.

Almost as soon as the project was launched it was met with intense scrutiny, with Zuckerberg having to testify before the US Congress and several of its founding members including, PayPal,Stripe, eBay, Visa and Mastercard jumping ship.

Co-founder of Libra, David Marcus,

that Facebook has distanced itself from the cryptocurrency with “less than 10 per cent of funding” coming from the social media platform.

By Facebook distancing itself from the cryptocurrency, it is hoped these amendments to the payment service will gain approval and officially open its virtual doors later this year.