This is probably not the most auspicious of debuts for Libra, possibly the most high-profile project involving cryptocurrency and blockchain, on Facebook’s SEC filings.
In its latest quarterly report, the social media behemoth admitted that the Libra project may never launch. The main reason cited by the company are various regulatory challenges, in the US and other countries around the world, faced by it.
The US Senate and Congress held hearings to discuss the cryptocurrency last month. While the hearings received much media scrutiny, they did not accomplish much in terms of providing clarity about Libra’s place in the existing regulatory framework. Nations in the G7 created a task force to examine crypto with a focus on the Libra project. They concluded that for the project to go ahead, the highest level of regulation would be required. The project is already in trouble in India, which has among the world’s biggest population of underbanked and unbanked. Facebook’s filings claim that the spotlight and regulatory scrutiny could affect its reputation, business, and financial performance. (But that might be a stretch, given that Facebook’s population has already suffered significant damage due to privacy-related issues.)
While regulation is a big part of why Facebook doubts the project will ever launch, it is not the only one. Facebook stated that the project might not take off as projected. Besides that, Facebook admitted that its lack of experience with crypto and blockchain technology could impede the project.
Facebook is also worried about costs associated with the project. It said that it would incur huge costs due to its participation in the Libra Association. This includes costs for marketing and developing all the related products and services. Facebook’s partners in the Libra Association have only signed Letters of Intent (LOI) and are not fully committed to it. Facebook is bankrolling the initial stages of the project. During the July 16th hearings, Marcus said the association would find “some way” to pay back Facebook after Libra’s scheduled launch next year. In its filings, Facebook said the investment might not be successful and could affect the reputation and financial performance of the overall company.