Social media giant Facebook unveiled Libra in June 2019 after over a year of secretive development and research work. At the time, the project envisioned a stablecoin backed by a basket of fiat currencies, one that could be used worldwide as a means of exchange. It immediately prompted international regulatory backlash, with lawmakers demanding that all development cease until they could better understand it, provide some level of regulatory oversight and ensure there were no risks to financial stability.
A number of its original members departed, mainly financial services firms citing regulatory risks, before Libra could even get started. Libra’s governing body, which was formally created in November 2019, later tightened the scope of the project, announcing in April 2020 that it would launch a group of stablecoins that were each backed by a single fiat currency or asset instead of the basket-backed token.
Levey believes regulators are warming up to the project, particularly through the changes and the implied distance from Facebook (which wasn’t named in Tuesday’s press release), which isn’t itself a member of the governing association, though its subsidiary Novi (formerly Calibra) is. Another founding member includes Breakthrough Initiatives, a space exploration group run in part by Facebook founder Mark Zuckerberg.
“I think regulatory stakeholders really are welcoming a more autonomous association. They want to see an association strong enough to make its own decisions and have a leadership team that is capable of directing the project. It is in part for that reason we decided to change the name, to move from Libra to Diem, and that will be effective [Tuesday],” he told CoinDesk.
A revised white paper also reduces Facebook’s role. While the original document released in June 2019 mentioned Facebook six times and said that “Facebook is expected to maintain a leadership role through 2019,” and noted its creation of Novi, the December 2020 version only said, “While Facebook teams played a key role in the creation of the Association and the Libra Blockchain, they have no special rights within the Association.”
Libra is ready to launch its first stablecoin, the “Diem dollar,” as soon as the new entity is licensed through the Swiss Financial Market Supervisory Authority (FINMA). The Financial Times first reported that a dollar-pegged coin could launch last week.