Facebook CEO Mark Zuckerberg is facing one of the biggest failures of his career - Libra. It can be simply called a Failure to Launch.
We all know that 27 companies including luxury brands were backing the new cryptocurrency Libra, a brainchild of Mark Zuckerberg. Among others, Swiss luxury watch and clock manufacturer Vacheron Constantin, multinational conglomerate LVMH, and online luxury fashion retail platform Farfetch announced that they have joined hands with the likes of Visa, Mastercard, PayPal, and eBay, to co-found the Libra Association.
The announcement of Libra found financial regulators across the world taking notice and quickly taking steps to make it a non-starter. Imagine Billions of Facebook users switching to the cryptocurrency Libra!
Libra is being examined with a microscope over fears that it could pose a threat to central bank money and financial stability.
US Treasury Secretary Steven Mnuchin, US Federal Reserve Chairman Jerome Powell, French Finance Minister Bruno Le Maire, and European Central Bank Executive Board Member Benoît Coeuré have all publicly aired fears over Libra.
Facebook, meanwhile, has warned investors that regulatory concerns might end up killing Libra. This was stated in its latest quarterly report to the US Securities and Exchange Commission (SEC).
In its Risk Factors, this is what Facebook had to say about their involvement with the Libra Foundation.
Our participation in the Libra Association will subject us to significant regulatory scrutiny and other risks that could adversely affect our business, reputation, or financial results.
We recently announced our participation in the Libra Association, which will oversee a proposed digital currency powered by blockchain technology, and our plans for Calibra, a digital wallet for Libra which we expect to launch in Messenger, WhatsApp, and as a standalone application.
Libra is based on relatively new and unproven technology, and the laws and regulations surrounding digital currency are uncertain and evolving. Libra has drawn significant scrutiny from governments and regulators in multiple jurisdictions and we expect that scrutiny to continue. As a primary sponsor of the initiative, we are participating in responses to inquiries from governments and regulators, and adverse government or regulatory actions or negative publicity resulting from such participation may adversely affect our reputation and harm our business.
As this initiative evolves, we may be subject to a variety of laws and regulations in the United States and international jurisdictions, including those governing payments, financial services, and anti-money laundering. In many jurisdictions, the application or interpretation of these laws and regulations is not clear, particularly with respect to evolving laws and regulations that are applied to blockchain and digital currency. These laws and regulations, as well as any associated inquiries or investigations, may delay or impede the launch of the Libra currency as well as the development of our products and services, increase our operating costs, require significant management time and attention, or otherwise harm our business.
In addition, market acceptance of such currency is subject to significant uncertainty. As such, there can be no assurance that Libra or our associated products and services will be made available in a timely manner, or at all. We do not have significant prior experience with digital currency or blockchain technology, which may adversely affect our ability to successfully develop and market these products and services. We will also incur increased costs in connection with our participation in the Libra Association and the development and marketing of associated products and services, and our investments may not be successful. Any of these events could adversely affect our business, reputation, or financial results.
I was sure about something like this happening, however, I did not see Facebook taking a step back so soon.