Libra Has ‘Failed’, Not Even Close to Launch

At the beginning of 2020, Facebook’s long-awaited Libra cryptocurrency looks nowhere near a release. Not only that, but more fresh questions are being raised, this time coming from Swiss authorities who are doubtful on Libra’s suitability as a global currency.

On December 27, 2019, the Swiss finance Minister and outgoing president, Ueli Maurer commented in Bern, that the Alpine state cannot authorize Libra in its present shape. Facebook was planning to launch the cryptocurrency in Geneva, but it seems that the Swiss regulators will not approve such a move in the near future.

As part of an interview with SRF, Maurer expressed an opinion that Libra “has failed” in its current shape as the national banks, which issue the fiat currencies that should back up Libra, have not accepted to do so.

The shift in tone is obvious and while Swiss regulators were very keen on welcoming Libra in June, nowadays their opinion is far colder. When Geneva was chosen as the base of the project, Facebook referred to the city as a hub of international cooperation. On the other side, Swiss regulators were content with the “positive” signals this “ambitious international project” brings to the country.

All began to change after the Securities and Exchange Commission, U.S. and European officials revealed their concerns over currency sovereignty, Facebook’s misuse of data history and the huge possibility of Libra to be used for criminal activity.

Nils Reimelt from the financial services consulting company, Capco Digital commented on the subject:

“As long as the SEC is concerned about Libra, saying it’s based on relatively new and unproven technology and could rival the U.S. dollar, other governments including the Swiss will take a wait and see approach.”

Reimelt considers that Facebook made a mistake by not contacting the Swiss bank regulator FINMA prior to announcing its plans to base Libra in Geneva. In addition, the Libra Association did not list the Swiss franc in the basket of currencies that will back up the cryptocurrency, which encouraged the uncertainty even further.

Thomas Jordan, the President of the Swiss National Bank also expressed similar concerns in a speech in September:

“If stablecoins pegged to foreign currencies were to establish themselves in Switzerland, the effectiveness of our monetary policy could be impaired.”

Although he did not mention Libra explicitly, it is quite clear what he means. FINMA also showed their stance in September, noting that in order to be approved, Libra has to put into use the “highest international anti-money laundering standards” and apply “bank-like” rules on risk.

The Libra Association on the other hand is “committed to a continuous and constructive dialogue” with the involved parties and noted that its “objective remains to find the best way to launch a fast, secure and compliant international payment system.”

Libra’s chief operating officer, Bertrand Perez is set to speak at the Geneva Blockchain Congress. In September Perez admitted that the launch of Libra depends on dialogues with regulators:

“This is why indeed we cannot say that we won’t launch in 2020, or that we are certain to launch on a particular date in 2020.”

The Swiss government shared a more delicately-phrased comment after Maurer’s remarks in December. The memo published on January 15, suggests that the Swiss side is open to re-evaluate the project. However, Libra will still be seriously monitored regarding “the form which Libra may take in the future.”

As the memo reads:

“Switzerland is generally open to projects that reduce the cost of cross-border payment transactions and seek to promote financial inclusion.”  

According to Reimelt, it is more than clear that “governments want to stay in control and Libra has to tweak their model and align to regulations to not become a threat.”