Facebook Announces Libra Cryptocurrency, Calibra Wallet – Industry Reaction

FinTech, Group, News, Opinion | June 18, 2019 By:

After months of rumors, Facebook today unveiled its plans for its own cryptocurrency, which the company called Libra. The social media network is launching with support from partners including PayPal, Uber, Spotify, Visa and Mastercard and plans to debut Libra sometime in the next six to 12 months. The coin is currently under construction, and Facebook hopes to raise as much as $1 billion from existing and future partners to support the effort.

“For many people around the world, even basic financial services are still out of reach: almost half of the adults in the world don’t have an active bank account and those numbers are worse in developing countries and even worse for women,” said Facebook in a press release.”If you fast forward a number of years, consumers all over the world will have the ability to access the world economy,” Facebook executive David Marcus said in an interview with The Associated Press.

Libra will have its value pegged to the US dollar, the euro, yen and other currencies. Each coin will be backed by a reserve fund of equal value held in real-world currencies.

The social network giant won’t run Libra directly. Instead, the company and its partners will oversee it through a nonprofit called the Libra Association, headquartered in Geneva and regulated by Swiss authorities.

In conjunction with the Libra rollout, Facebook has also created a new subsidiary, Calibra, that’s developing a digital wallet for the coin  Calibra pledges that it won’t share transaction data from details of Libra user’s financials with Facebook unless compelled to do so in criminal cases, a crucial issue given past complaints about Facebook’s data harvesting.

Calibra won’t require a Facebook account to make a free wallet and will allow users to send Libra using Facebook’s WhatsApp and Messenger. Instagram messages won’t be included.

Some industry reactions to the announcement:

Mustafa Jang, Head of Research and Financial Services at Diginex:

“Facebook’s Libra is certainly a bullish development for the industry. Exposing 2 billion plus people to digital assets will only further the legitimization of cryptocurrencies as an alternative asset class. The quality of the firms supporting Libra speaks to the increasing importance of digital assets in the modern world.”

Michael Harris, Director Financial Crime Compliance and Reputational Risk at Lexis Nexis® Risk Solutions:

“This is an attempt to drag cryptocurrencies out of the twilight and into the mainstream. Endorsed by the Bank of England, the US Treasury, major blue-chip companies and pegged to a basket of fiat currencies, Facebook’s cryptocurrency is likely to be one of the safest and most stable around. However, this doesn’t negate the need for greater regulation surrounding cryptocurrencies due to the opportunity they present to financial criminals. Any companies dealing with cryptos – or indeed with crypto users as customers – must conduct strong due diligence, especially as a global standard for regulation has yet to be reached.”

Tony Gu, Founding Partner at NEO Global Capital:

“Facebook’s arrival on the crypto scene illustrates the subtle transformation of money as an economic medium, mirroring the metamorphosis of the global financial system into a virtual economy. Whereas cryptocurrencies are often not viewed in the same league as traditional capital markets, the scales are set to tip in favour of the digital asset class with the social media behemoth’s latest endorsement via Libra. The digital coin’s core proposition, beyond onboarding a greater sense of legitimacy to the nascent space, lies in its fulfillment of a future where Facebook becomes the sole custodian of value. Money prescribed under the modern theory of macroeconomics have two definitions: M1 and M2, with the latter referring to the multiplier effect of currency in use. By boosting the circulation of transactions across its growing platforms, Facebook is a unique position to capture the spillover effects of coins that are issued within its ecosystem i.e. M2, imagined through a built-on-blockchain central bank anchored by Libra.

Jehan Chu, Co-founder of Social Alpha Foundation and Managing Partner at Kenetic:

“Facebook’s bold, all-in crypto approach is not only a breath of fresh air for the industry, but is the new benchmark for unicorns if they want to get to the trillion dollar level. Crypto economies are still in their infancy and have massive growth curves ahead, and Facebook will not only boost the industry, but benefit from utilizing their own internal cryptocurrency to capture and drive value. History will mark Facebook’s Libra as the starting gun of cryptocurrency 2.0.

Facebook’s onboarding of the “Who’s Who” in global payments resembles how Apple brought in the largest music publishers to their iTunes platform. While it’s unlikely that the endgame will result in the same power shift away from traditional institutions, Libra will trigger a seismic shift in how these institutions engage and adopt crypto into their businesses – Visa crypto won’t be far away. While critics bemoan the centralized nature of Facebook’s crypto, I believe it is an enormously positive driver that will accelerate crypto into mainstream consciousness and adoption, and provide further capital and opportunities for fully decentralized blockchains like bitcoin and ethereum and the startups that build on them.”

Matt Luczynski, CEO, and Co-founder of Travala.com, a blockchain-based hotel booking platform:

“Having Booking.com as one of the members of the Libra Association is indeed a positive sign not only for the cryptocurrency space but for the entire travel industry. Cryptocurrency and blockchain hold huge potential in revamping the travel industry, making it more efficient and streamlined, so seeing a well-respected, household name like Booking.com pledging their commitment to the future of cryptocurrencies is really refreshing to see.

I believe this is far more than a group of tech companies cashing in on the hype, this signals the start of crypto’s mass adoption. Visa, PayPal, Stripe, are all trailblazers within the payments space, and this involvement in Facebook’s Libra is not only reassuring but sparks a new excitement in those of us already championing cryptocurrency as a form of everyday payment.”

Mateusz Tilewski, CTO of Concordium:

“With some of the world’s biggest payment giants such as Mastercard, Visa, PayPal and Stripe on the consortium of companies governing Facebook’s bespoke cryptocurrency, and with its coin due to be pegged to government-issued cryptocurrencies, this development is bound to transform the way international transactions are carried out. This development is especially interesting in light of the FATF announcing that it will impose new rules for virtual asset service providers (VASPs), with regulatory compliance set to be at the top of Facebook’s agenda. While detractors may claim that Facebook is trying to create a new stream of revenue amidst its net profit falling 51 percent year-on-year, it has an enormous reach of 2.38 billion monthly active users which will undoubtedly help with the mainstream adoption of cryptocurrencies and will see other big players moving into the space.”

Iain Wilson, Advisor at NEM Ventures:

“On balance, it’s probably helpful for traditional players to enter crypto, especially alongside other traditional players who already have, such as Visa (with Wirex) and Paypal (with Coinbase). A company like Facebook has huge distribution and potential for P2P or micro transactions, so the mass market will be further exposed to tokens. At this point, people will be free to exchange out of a centralised Facebook system into a more decentralized currency like bitcoin.”

Tara Annison, Technical Product Manager at the PR9 Network, which provides real-time trading and settlement for blockchain-based assets held in cold storage:

“The introduction of Libra shows that a wide range of players across the blockchain and traditional finance/tech space are interested in blockchain technology and its potential. The Libra foundation has stated that they think blockchain is a powerful tool for improving financial inclusion and it will be interesting to see how they shape the product offering around this, especially regarding the user experience. They have also developed their own blockchain and are using Move as the programming language, so it will be exciting to see if this sparks other innovations in the space and other companies exploring their open source technology. Within the Libra whitepaper, the focus is very clearly on improving financial inclusion and the prevalence of mobile technology in many of these regions. Therefore, I would expect a mobile-first offering which takes advantage of the user experience expertise many of these companies have. The ability for users to understand the offering and be able to easily purchase and trade Libra will be pivotal in the success of the project.”

Daniel Spier, CEO of INITIUM Group:

“We welcome today’s announcement from Facebook on the launch of Libra. It’s encouraging to see so many players join the platform from its inception, however the road to adoption will likely face some hurdles as regulators the world over struggle to get to grips with challengers to legacy financial institutions and their product offering. We at INITIUM Group want to bank the unbanked entrepreneurs of the New Digital Economy and we are greatly encouraged by the big step taken by Facebook to help transform the world of day to day payments. We firmly believe this is now a turning point when distributed ledger technology enters the main stream.”

Carlos Domingo, co-founder/CEO of Securitize:

“When a globally known brand like Facebook elects to do an STO (Security Token Offering) over traditional methods as a way to fund incentive programs and cover operational costs, it legitimizes the whole STO industry. Hopefully this will help raise awareness as to why an STO and digital securities are a better option for raising capital and managing the lifecycle of securities.”

George Waller, CEO, BlockSafe

“Facebook’s crypto currency bridges the gap for people and businesses, enabling everyone to now conduct transactions with a universally accepted cryptocurrency which utilizes the world’s largest communication platform, eliminating the everyday headaches with borders, languages and currency restrictions. You can rest assured that hackers will follow the money. Last year, hackers stole over $1.3 billion dollars from the blockchain ecosystem. Hackers will always find a way to breach people & systems, after all, they understand systems at code level and they are skilled at the art of social re-engineering. This announcement only emphasizes the need for greater security, like what BlockSafe has to offer.”