- Facebook will finally launch its Libra cryptocurrency in January 2021, but very different from the initial plan.
- Bitcoin and Ethereum will face a new competitor.
Today it was announced that Facebook’s long-awaited and controversial digital currency, Libra, will launch in January 2021, according to a report published by the Financial Times. However, Libra has had to mutate from its original format, introduced 1 year ago, in order to see the light of the market.
In this way, according to the Financial Times, three people associated with the Libra project confirmed that the Libra Association plans to launch it solely backed by the US dollar.
Recall that, last year, Facebook announced its intention to enter the crypto market by informing its plans to develop its own digital currency, called Libra, which would be backed by a basket of different fiat currencies, such as the dollar and the euro. In fact, at the beginning, companies such as Visa, PayPal and MasterCard supported the project.
However, Facebook’s path to success was hampered by regulatory concerns introduced by the project. Just three months after the announcement, the European Central Bank was already warning that Libra could be a threat to the monetary police of the European Union, as well as to the euro itself.
The challenges that Facebook had to face together with the Libra Association make up an extensive list. Therefore, Libra was not going to see the light if they did not manage to appease the nerves of the regulators.
This is how, in April 2020, Libra changed its strategy and abandoned the idea of a token linked to a basket of global currencies. It would no longer be a stablecoin but a digital currency destined to function as a payment network and that, in addition, would be exclusively linked to the local currency where it operates.
Therefore, we can now understand why the Libra launch in January 2021 will be solely backed by the dollar. Simply put, the project’s ambitions have been further reduced with the aim of having a positive policy and regulatory reaction.
So yes, the plans of the Libra Association aim for the launch to be in January 2021. However, we must bear in mind that, there is still no precise date for the launch since regulatory approval is required from the Supervisory Authority of the Swiss Financial Market, or FINMA, to operate as a payment service.
Is Libra a threat to Bitcoin and Ethereum?
Certainly when Facebook’s plans to launch a stablecoin that could easily rule the world were announced, the crypto market questioned whether it could be a worthy competitor to Bitcoin and Ethereum .
Perhaps, under the original premises, Libra could have been a fierce competitor to Bitcoin and Ethereum. However, under the current limited conditions, Libra is not in the same category as the mentioned cryptocurrencies.
Also, let’s keep in mind that Bitcoin and Ethereum have seen their success thanks to the fact that they are not linked to fiat currencies, they represent freedom. Meanwhile, it appears that Libra will be the digital version of the US dollar, and therefore monetary policies that affect the valuation of the dollar will impact the digital currency as well.