Last week Libra got back on the spotlight: a “Libra 2.0” white paper was out. Almost one year after the first version came out, the Facebook-led project was updated to give a new appearance to the digital currency, one that regulators may be less skeptical about.

At the same time, the Swiss Financial Market Supervisory Authority (FINMA) received the application from the Geneva-based Libra Association for a payment system license.

At AtonRâ, we analysed the stablecoin from different angles since the first announcement of the project in June 2019. Though positive on the potential of the endeavour, we stressed out that technical capabilities, regulatory objections, and economic acceptance would have killed the project. Only if substantial modifications had been made, Libra could have started the walk towards its stated goal: “a simple global payment system and financial infrastructure that empowers billions of people”.

And after months, during which a downpour of critics came from every corner of the world and several partners dropped out of the Libra Association, a reviewed white paper has been published to correct the trajectory of what can be a game changer. Its key developments include the following four points:

1. Offer of single currency stable coins (in addition to the initial multi-currency coin);
2. Establishment of a strong compliance framework to improve the safety of the Libra payment system;
3. Waiving the future transition to a permission less system;
4. Design of strong safeguards for the Libra Reserve.

The Libra network now plans to expand its offer in fully-stricken LibraUSD, LibraEUR, LibraGBP, and LibraSGD, with an increasing number in the future without hampering the security and integrity of the network. Furthermore, strong standards are currently worked out to prevent illicit activities and dispel regulatory concerns (Anti-Money Laundering, Terrorism financing, etc.).

The plan of transitioning from a permissioned to a permissionless network is foregone. Few institutions will thus handle the transaction system, which will remain in the hands of Libra Association members. The whole system will be corroborated by a strict risk management of the Reserve, which will be made up of assets featuring “very short-term maturity, low credit risk, and high liquidity”, while maintaining a capital buffer.

The project is getting more concrete and Calibra (the digital wallet subsidiary of Facebook) plans to hire 50 people in Ireland by the end of 2020. New prominent members have joined the Libra Association recently: Shopify and Heifer International. FINMA, the Swiss Financial Market Supervisory Authority has been in regular contact with foreign supervisory entities since the inception of the project. Its license approval would serve as a determinant catalyst for the project. 

Libra is just another confirmation that the digital payments era is overtaking the old cashbased paradigm. Meanwhile, central bank digital currencies (CBDCs) are the public endeavour to keep up with the shift to e-money. Both private and public institutions are on the run to replace current old-fashioned payments means, and that confirms our view that we are on track for the third phase for Mobile Payments: increasing mass adoption.