Libra is a forthcoming cryptocurrency offered by the Libra Association, a Swiss non-profit formed by 28 investors, including Facebook’s subsidiary Calibra, Visa, Mastercard, and Uber. Each investor pledged $10 million to the project. (Murphy & Bond, Financial Times).  Since the announcement of the coin in June, Facebook has been Libra’s principal cheerleader. (Id.)In that time, Libra has faced criticism over regulatory concerns, and even its claim of being a cryptocurrency.

Libra is unlike other cryptocurrenciesin that the Libra Association will have authority over the coin. Where other cryptocurrencies have decentralized blockchain ledgers and are not issued by a central authority, the Libra Association will issue Libra and validate Libra-coin transactions. (Canellis, NextWeb). Another difference is that Libra is a stablecoin, meaning its value is pegged to real-world assets – like the U.S. dollar or gold – whereas other cryptocurrencies derive their value from the demand they generate. These assets are held in reserve to stabilize the price of the currency. In testimony to the Senate Banking and House Financial Services committees, Facebook stated Libra would likely be backed by the U.S. dollar, Euro, British pound, Japanese yen, and Singapore dollar. (Light, Bloomberg). Finally, Libra’s investors will earn a profit from issuing the currency, and Calibra itself will offer exclusive Libra payment services to users. (Canellis,NextWeb). Because of these features, Libra is arguably much closer to a “quasi-sovereign” currency than the borderless and openly accessible digital currency immune from the control of a single entity as envisioned by Satoshi Nakamoto, bitcoin’s creator. (Id.) 

Libra has received a lot of pushback and scrutiny from lawmakers and regulators over concerns ranging from data privacy, to money laundering, to tax evasion and anti-trust. (Murphy & Bond, Financial Times). Also of concern is Libra’s potential to more broadly disrupt the financial system. (Fernandez, Fox Business). The Chairman of the Federal Reserve noted that Libra needs to be held to the highest regulatory standards to avoid potential financial system disruptions. (Id.) Members of the United States Congress have also expressed concerns over privacy and unfair business practices. (Murphy & Bond, Financial Times). 

Across the Atlantic, EU regulators are investigating potential restrictions on competition that Libra may create by shutting out rivals from the proposed payment system. (Beyoud, Bloomberg). Additionally, the EU has concerns about how Calibra and Facebook will share personal and financial information in light of EU privacy requirements under the General Data Protection Regulation (GDPR). (Id.) The regulators see a high potential for abuse, especially in light of Facebook’s recent, and historical, data privacy breaches. (Stevens, Decrypt).

As a result of this scrutiny and the regulatory spotlight it could bring to the investors’ businesses, some of Libra’s initial backers are re-considering their investment in the Libra Association. (Murphy & Bond, Financial Times). That said, most still support the project. (Id.) Facebook stated the Libra Association would not launch the currency until it has fully addressed regulatory concerns and received the necessary approvals.  (Light, Bloomberg). If that is the case, Libra has a lot of regulatory hoops to jump through before it comes on the market.