Facebook should be given the “benefit of the doubt” by regulators in its ambitions to launch the cryptocurrency it backs and its digital wallet, the head of the company’s financial services arm said on Monday.
David Marcus, the head of Facebook Financial, also known as F2, said he hopes both the cryptocurrency called Diem and the social networking firm’s wallet Novi will launch next year.
“I hope that we get to participate with … Novi and Diem and the big changes of 2021, pending regulatory approvals where we need to obtain them,” Marcus said at the Singapore FinTech Festival, addressing a question on the biggest changes for financial services in the year ahead.
Facebook’s cryptocurrency project has been a rollercoaster since it was announced last year, facing huge criticism from regulators, a scaling down of ambitions and a rebrand.
The cryptocurrency was initially called Libra and was designed to be managed by a non-profit consortium consisting of several companies called the Libra Association. Facebook had planned to launch a wallet called Calibra that would allow users to send this cryptocurrency to each other.
One Libra coin was initially supposed to be backed by a basket of currencies. But regulators raised a number of concerns from the impact Libra could have on financial stability to issues over data privacy and money laundering.
In April, the Libra Association scaled back plans and said it would offer stable coins backed by just one nation’s currency, rather than a single coin backed by several currencies.
And last week, the Libra Association changed its name to the Diem Association. Earlier this year, Facebook changed the name of its digital wallet Calibra to Novi.
Last month, the Financial Times reported that the cryptocurrency Diem is preparing to launch as early as January, citing three people familiar with the matter.
The Diem Association is currently waiting for approval from the Swiss Financial Market Supervisory Authority as the organization is based in Switzerland, the FT reported.
Marcus was not asked about this report specifically during the course of the panel.
Though Diem is described as a cryptocurrency, it is not like bitcoin which is perhaps the most well-known digital coin. It has a central organization behind it, something that bitcoin doesn’t. It is also backed by fiat currency, again a point of difference with bitcoin.
‘Benefit of the doubt’
The Facebook executive implored regulators, which have heavily criticized the company’s cryptocurrency efforts, to give Diem and Novi a chance.
“I don’t think what we are asking for is just immediate trust. I think … what we’re asking for is at least to have the benefit of the doubt,” Marcus said.
He argued that Facebook could have built the cryptocurrency in a “closed way” only making it available to users of WhatsApp and Messenger, two apps that the company owns. But instead, the social network has entered a consortium with other companies.
“I think you’d be hard-pressed to find any company that has done this in recent history of actually building something, investing considerable amount of resources into it, and then saying ok, we are going to relinquish our power here and we are going to try to make it as open ecosystem as it can be and basically tie one or both hands in our backs when it comes to enabling competition on the very thing that we’ve created,” Marcus said.
“I think all of those things that we’ve done — which has created all kinds of complications in the execution of this vision — is I think a good reason to give us the benefit of the doubt in terms of our intentions and what we plan to do here.”
The push to launch Diem and Novi comes at a time when central banks are also exploring their own digital currencies. China has already begun some real-world trials of a digital yuan.
