Why Facebook’s Libra Failed
The main reason behind the downfall of Libra was regulatory restraints. The cryptocurrency sought registration and the necessary licensing in Switzerland. However, the country’s finance minister, Ueli Maurer, stated that Libra did not have a chance to succeed in its current form. The finance minister stated that central banks would not approve the other digital assets backing the project.
However, the finance minister stated that the project needed reworking, after which the Libra Association would seek another registration. According to Facebook’s plans, the Libra currency would be issued and operated by the Libra Association.
Since the plans for Libra went underway, there were concerns from regulators and politicians on the project regarding monetary policy and the evolving global financial ecosystem. Earlier, David Marcus, the co-creator of Libra, had stated that regulatory issues were attributed to the delayed launch of the project.
What Does Libra’s Failure Mean for Tech Firms Moving into Crypto?
The fail of Libra cast a dark shadow for other technological firms looking to expand operations into the crypto sector at the time. In 2019, the regulatory framework surrounding cryptocurrencies was tough, given that many countries had banned digital assets.
Since 2019, the crypto space has greatly evolved, and firms and countries that had once distanced themselves from the sector have embraced it because of its growth potential. Big Wall Street financial firms such as Goldman Sachs and JPMorgan that had once bashed cryptocurrencies have changed tune this year and are now embracing crypto.
Libra failed because of tough regulations, but the financial regulatory framework has become more accepting of cryptocurrencies. Various countries have crafted laws aimed at protecting investors in this sector. Besides, firms that want to launch crypto-related products are getting the proper licensing such as the approval of crypto exchange-traded funds (ETFs) in Canada.
Another reason why a similar project could work right now because people have become more accustomed to cryptocurrencies. More and more people are buying cryptocurrencies, a move that has seen growing crypto adoption. Hence, firms launching crypto-related products could experience much attention from clients and boost their revenues in this rapidly growing sector.
