House Financial Services Committee on Capitol Hill in Washington on Oct. 23, 2019. (Photo: Susan Walsh, AP)
Facebook hopes to launch a trial of its long-stalled digital currency project by the end of this year, according to a new report from CNBC. The currency, first announced in 2019 as Libra and then renamed Diem after some bad publicity, will now be pegged to the U.S. dollar, provided the tech giant can actually get it off the ground this time.
Facebook first announced plans for the digital currency in June of 2019 and was hit with immediate backlash from governments and consumer groups around the world that worried what would happen if a huge tech monopoly like Facebook competed with the world’s largest currencies. Facebook has roughly 2.8 billion active users on a planet of 7.9 billion people.
Facebook’s plan in 2019 was to launch the “blockchain” currency by early 2020, something that obviously didn’t happen after the tech company’s partner organisations like PayPal and eBay started to pull out after the wave of negative press.
But CNBC, and whoever leaked this Facebook news to the financial outlet, seem to hint that Facebook is taking a much more cautious approach this time, even if details are still extremely scarce.
The Diem Association, the Switzerland-based nonprofit which oversees diem’s development, is aiming to launch a pilot with a single stablecoin pegged to the U.S. dollar in 2021, according to a person familiar with the matter.
The person, who preferred to remain anonymous as the details haven’t yet been made public, said this pilot will be small in scale, focusing largely on transactions between individual consumers. There may also be an option for users to buy goods and purchases, the person added. However, there is no confirmed date for the launch and timing could therefore change.
What the hell is the Diem Association? It appears to be the next iteration of the Calibra Association, the supposedly independent organisation set up by Facebook to oversee the currency back when it was called Libra.
When reached for comment about the CNBC story, Facebook’s Head of Communications for Australia, Antonia Sanda told Gizmodo by email, “looks like this could be a leak as there are no official announcements from the Diem site, but I’ll leave that for the Diem team to confirm.”
Sanda provided Diem’s email address and wrote, “We now send all media queries direct to the Diem organisation, as it is separate from FB […] if you’d like to contact their team direct.” Gizmodo has not yet heard back from Diem but will update this post if we do.
Governments around the world are setting up committees and task forces to examine the pros and cons of creating their own digital currencies, with China, Japan, and the UK announcing their own explorations in recent months. And it’s no secret that cryptocurrencies like bitcoin and ether have gained traction in recent years, with large companies like PayPal starting to get in on the action. PayPal announced last month it was launching a way for consumers to pay using cryptocurrencies at millions of retailers, handing the merchant fiat during the transaction.
But will Facebook’s digital currency flourish after already experiencing one very embarrassing false start? Only time will tell. But you can bet that government regulators will be keeping a close eye on Facebook’s plans for the future of money, especially since most world leaders think CEO Mark Zuckerberg already has too much power.
Congressman Brad Sherman even told Zuck in a July 2019 hearing that his new digital currency — which Sherman mockingly called “Zuck Bucks” — could cause the next 9/11, apparently referring to the possibility that criminals would use Facebook’s new currency for illegal activities. And when that’s your starting point of conversation with politicians who could help decide the fate of your new business idea, it’s tough to see it getting very far.