Libra Might Never be Launched, Says Facebook
The company is now thinking on how wise it is to suck up all the international regulatory challenges for a crypto that is based on a new technology which is not yet tested by time and the vast 2+ billion user base of the company. In the filing submitted to the U.S. SEC, Facebook expressed-
We will also incur increased costs in connection with our participation in the Libra Association and the development and marketing of associated products and services, and our investments may not be successful. Any of these events could adversely affect our business, reputation, or financial results.
Highlights from the quarterly report submitted to SEC-
In the recent quarterly report to the United State’s Securities and Exchange Commission (SEC)-
- FB has admitted that regulatory issues may prove to a major hindrance in the release of LIBRA. The regulatory challenges seem to be that tall mountain that Facebook can’t surmount.
- In the quarterly report, the company said that regulating a new technology will throw a lot of barriers based on unclear rules in the country and other countries as well.
- The company has not given any kind of assurance on its native token’s release or the release time of the related products and the services.
- It has been frankly mentioned that the services may not even get released “at all.”
- Facebook further said the company’s decision to move towards the launch would attract a lot of major regulatory scrutiny and related risks.
- These factors may have an ill effect on the “business, reputation, or financial results.”
Let’s talk in detail about the reasons hindering the launch-
The following two factors are the source of doubt in the launch of LIBRA-
- The native token LIBRA is based on a new technology which is yet to be proven for credibility, and
- Secondly, the rules and regulations around digital currency are not concrete either, rather, with crypto sphere the rules are also evolving;
Tight Scrutiny from all over the world-
According to the filings of SEC, the native token of FB has got a good amount of “scrutiny” from various governments and regulators. This scrutiny is based on multi-layered jurisdictions. Further, the firm expects such scrutinizes only continue to grow. The fact that Facebook, with its huge user base, was to bring major results in crypto adoption, is now proving to be an issue from the regulatory point of view.
- The vast reach of Facebook has made many central authorities, banks, financial institutions, governments, and other official bodies to demand finer details of the project, as the huge user base translates to a challenge to these bodies eventually in terms of stability issues, money laundering, and similar threats.
G7 Nations demand “highest (regulatory) standards”-
Not only this, the G7 nations whose main focus is to resolve crypto sphere related problems, is also putting its attention on LIBRA. As per G7 nations, this project will require “highest standards” of regulations in order to smoothly run. Therefore, suggestions for halting the project for the time being seem more practical rather than launching into an uncontrollable situation.
In the SEC filing, FB further added-
[…] These laws and regulations, as well as any associated inquiries or investigations, may delay or impede the launch of the Libra currency as well as the development of our products and services, increase our operating costs, require significant management time and attention, or otherwise harm our business.
Naivety of Libra is posing further issues-
Regulations are indeed a major challenge to overcome, but on the other hand, there is another source of uncertainty of the launch of the crypto token. The second source is lack of experience and insight on the digital currency and the blockchain technology overall. With the roaring regulation scrutiny, without solid experience is highly shaky risk to venture into. The company, therefore, thinks that the moving forward with launching LIBRA may have adverse effects on the development and marketing of the related products and services.
A blow to the crypto sphere overall?
All those past releases about Facebook’s native token- Libra that revealed its qualities such as- it is backed by securities and currencies to give more stability and trust, and the company having the ‘seigniorage power’ for building a cryptocurrency for 2.7 billion users around the world; stirred the hopes of many in the industry. This has even lead many market analysts and experts to predict a bright future of BTC. For instance, the CEO of Galaxy Digital- Mike Novogratz predicted that BTC would soon stabilize between 10K U.S Dollars to the 14K U.S. He based his prediction on the recent growth of the crypto from 4K U.S. Dollars mark to 13.5K U.S. Dollars mark. He also referred to the significance of mass adoption of the cryptocurrency which Facebook’s LIBRA’s launch was supposed to bring about based on its huge user-base of Facebook (2 billion users.) All that hype for the launch of Libra was for nothing?