After several backlashes from regulators around the world, Facebook has finally redesigned its cryptocurrency project, Libra in a bid to gain regulatory approval. The plan for the revamp was initially announced last month.
The social media giant had received outright disapproval ever since it unveiled the Libra project in 2019. The company, at that time, described it as futuristic global money that could serve as the foundation for a new kind of money.
Global regulators fear the Libra project could disrupt the existing global financial system as it would give Facebook too much power as the company would start playing the roles of a central bank.
Facebook and its partners, however, have decided to redesign the project to eliminate the regulatory hurdles. The Libra project will now be focused on creating a more traditional payment. In this case, the stablecoin will be tied to local currencies, similar to the digital dollars in a Paypal account.
According to members of the Libra Association, this move is a “response to a global outpouring of opposition to the cryptocurrency.”
The new design, as explained by the association, claims that Facebook-backed Libra cryptocurrency would create multiple stablecoins with each backed the national currency of individual countries. A separate coin supported by multiple currencies would be useful for moving money between countries, hence making local commerce easier, the report said.
The initial plan for Libra to take the distinctive open architecture of Bitcoin has now been discarded. This is because there were many concerns that such a design could be prone to terrorists and other bad actors using it for underhanded purposes.
With the new design, Libra will now be a closed system in which only partners with the approval of the association can build infrastructure, such as wallets, for the coins, the team explained.
Meanwhile, the G20 Financial Stability Board (FSB) recently released ten recommendations that would be used to regulate stablecoins issuance, including Facebook’s Libra.