Social media giant Facebook has finally provided a glimpse into the hard currencies backing their Libra cryptocurrency.
As first reported in the Independent, in a letter to German politician Fabio de Masi, Facebook said that half of the Libra cryptocurrency would be backed by reserves of US dollars, while the Euro, Japanese Yen, British Pound and Singapore dollar would also provide support. The thinking goes that by having solid and liquid underlings would help stem some of the price volatility that has been seen in other cryptos such ass Bitcoin and other lesser currencies.
But wait…where is the Yuan? China’s strong economy and government protection of its currency would seem a natural fit for Libra. Not to mention its inclusion in the underling basket could prompt China to relax censorship of social media within the country.
But with the ongoing trade dispute between the US and China, the move away from the Yuan might make US regulators more apt to allow the social media entity to use Libbra more freely.
French finance minister Bruno Le Maire said recently that Libra’s development would be blocked in Europe as it poses a threat to “monetary sovereignty”.
Politicians in the UK expressed similar concerns earlier this year, claiming Libra represents Facebook’s latest attempt to “turn itself into its own country.”
Facebook, via its Calibra subsidiary, has enlisted major players in the Libra project—such as Mastercard and Visa.
However, the New York Times and others have reported PayPal has decided to withdraw from the Libra Association, the 28-member nonprofit organization formed in June 2019 to oversee the cryptocurrency’s creation and eventual consumer rollout. The company doesn’t cite a specific reason, saying only in one statement to The Verge that it decided “to forgo further participation in the Libra Association at this time and to continue to focus on advancing our existing mission and business priorities as we strive to democratize access to financial services for underserved populations.”
[Editor Update: PayPal, Visa, MasterCard and Stripe have all opted to not support Libra as of Oct 14, 2019.]