Facebook’s Long-Stalled Digital Currency Could be Tested This Year: Report

Facebook CEO Mark Zuckerberg testifies before the House Financial Services Committee on Capitol Hill in Washington on Oct. 23, 2019.

Facebook CEO Mark Zuckerberg testifies before the House Financial Services Committee on Capitol Hill in Washington on Oct. 23, 2019.
Photo: Susan Walsh (AP)

Facebook hopes to launch a trial of its long-stalled digital currency project by the end of this year, according to a new report from CNBC. The currency, first announced in 2019 as Libra and then renamed Diem after some bad publicity, will now be pegged to the U.S. dollar, provided the tech giant can actually get it off the ground this time.

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Facebook first announced plans for the digital currency in June of 2019 and was hit with immediate backlash from governments and consumer groups around the world that worried what would happen if a huge tech monopoly like Facebook competed with the world’s largest currencies. Facebook has roughly 2.8 billion active users on a planet of 7.9 billion people.

Facebook’s plan in 2019 was to launch the “blockchain” currency by early 2020, something that obviously didn’t happen after the tech company’s partner organizations like PayPal and eBay started to pull out after the wave of negative press.

But CNBC, and whoever leaked this Facebook news to the financial outlet, seem to hint that Facebook is taking a much more cautious approach this time, even if details are still extremely scarce.

From CNBC:

The Diem Association, the Switzerland-based nonprofit which oversees diem’s development, is aiming to launch a pilot with a single stablecoin pegged to the U.S. dollar in 2021, according to a person familiar with the matter.

The person, who preferred to remain anonymous as the details haven’t yet been made public, said this pilot will be small in scale, focusing largely on transactions between individual consumers. There may also be an option for users to buy goods and purchases, the person added. However, there is no confirmed date for the launch and timing could therefore change.

What the hell is the Diem Association? It appears to be the next iteration of the Calibra Association, the supposedly independent organization set up by Facebook to oversee the currency back when it was called Libra.

When reached for comment about the CNBC story, Facebook’s Head of Communications for Australia, Antonia Sanda told Gizmodo by email, “looks like this could be a leak as there are no official announcements from the Diem site, but I’ll leave that for the Diem team to confirm.”

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Sanda provided Diem’s email address and wrote, “We now send all media queries direct to the Diem organisation, as it is separate from FB […] if you’d like to contact their team direct.” Gizmodo has not yet heard back from Diem but will update this post if we do.

Governments around the world are setting up committees and task forces to examine the pros and cons of creating their own digital currencies, with China, Japan, and the UK announcing their own explorations in recent months. And it’s no secret that cryptocurrencies like bitcoin and ether have gained traction in recent years, with large companies like PayPal starting to get in on the action. PayPal announced last month it was launching a way for consumers to pay using cryptocurrencies at millions of retailers, handing the merchant fiat during the transaction.

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But will Facebook’s digital currency flourish after already experiencing one very embarrassing false start? Only time will tell. But you can bet that government regulators will be keeping a close eye on Facebook’s plans for the future of money, especially since most world leaders think CEO Mark Zuckerberg already has too much power.

Congressman Brad Sherman even told Zuck in a July 2019 hearing that his new digital currency—which Sherman mockingly called “Zuck Bucks”—could cause the next 9/11, apparently referring to the possibility that criminals would use Facebook’s new currency for illegal activities. And when that’s your starting point of conversation with politicians who could help decide the fate of your new business idea, it’s tough to see it getting very far.

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UK Launches Digital Currency Task Force to Explore the Future of Money

A British ten pound sterling and five pound sterling note are arranged in a photograph in London.

A British ten pound sterling and five pound sterling note are arranged in a photograph in London.
Photo: Justin Tallis (Getty Images)

The Bank of England and the UK’s Treasury have launched a task force to explore the use of a national digital currency, the British government announced in several press releases early Monday as part of April 2021 Fintech Week.

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The task force, formally known as the Central Bank Digital Currency (CBDC) Taskforce, will examine the pros and cons of issuing a new digital form of money that could be used by British consumers alongside cash. But the government is quick to note it hasn’t yet reached a final decision about issuing a digital currency that would potentially compete with cryptocurrencies like bitcoin and ether.

The British government and Bank of England laid out four primary points of interest and goals for the task force, including:

  • Coordinate exploration of the objectives, use cases, opportunities and risks of a potential UK CBDC.
  • Guide evaluation of the design features a CBDC must display to achieve our goals.
  • Support a rigorous, coherent and comprehensive assessment of the overall case for a UK CBDC.
  • Monitor international CBDC developments to ensure the UK remains at the forefront of global innovation.

The new task force will be led by the Deputy Governor for Financial Stability at the Bank of England, Jon Cunliffe, and HM Treasury’s Director General of Financial Services, Katharine Braddick, according to a press release.

The announcement comes as several other central banks around the world have announced similar investigations into digital currencies, including China and Japan. The press release notes the new task force will be keeping a close eye on international developments, which seems to be where most central banks are sitting at the moment.

Everyone wants to be ready for the future, but very few people want to go first. Especially when so much is at stake. If you’re going to issue currency, it needs to work in a way that won’t completely collapse the global financial system—a house of cards that only works because enough people believe that it works.

Best of luck to everyone! Please don’t ruin society as we know it!

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Japan’s Central Bank Launches One-Year Test of Digital Currency

File photo of a woman passing a quotation board displaying share price closing numbers of the Tokyo Stock Exchange in Tokyo.

File photo of a woman passing a quotation board displaying share price closing numbers of the Tokyo Stock Exchange in Tokyo.
Photo: Kazuhiro Nogi/AFP (Getty Images)

Japan’s central bank has started trials of a new digital currency in an effort to experiment with how it might be used, the Bank of Japan announced on Monday. The announcement comes after the Chinese government revealed it was doing something very similar with a digital yuan in early March.

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“The Bank of Japan has been undertaking preparations to begin experiments on Central Bank Digital Currency (CBDC) in early fiscal year 2021, to test the technical feasibility of the core functions and features required for CBDC,” the Bank of Japan said in a statement published online. “As necessary preparations are now complete, Proof of Concept (PoC) Phase 1 begins today.”

The announcement confirms rumors that have been swirling since late 2020 about Japan’s potential creation of a digital yen. But there’s no guarantee that Japan will ever make the digital currency available to the public. Everything is very much experimental right now, according to the Bank of Japan.

“In PoC Phase 1, the Bank plans to develop a test environment for the CBDC system and conduct experiments on the basic functions that are core to CBDC as a payment instrument such as issuance, distribution, and redemption,” the Bank of Japan statement continued. “This phase will be carried out through March 2022, for a duration of one year.”

As the Register points out, virtually every large central bank in the world is experimenting or rumored to be experimenting with digital currencies to ensure they’re ready whenever the time may come to issue one. And as cryptocurrencies like bitcoin and ether become more mainstream through services like PayPal, that time could be sooner rather than later.

In the U.S., Treasury Secretary Janet Yellen has said she supports financing research into a digital dollar, though she’s signaled the kind of conservative thinking you’d expect from a top government official. At least the kind of thinking in a normal (read: post-Trump) government.

“There’s a lot to consider here, but it’s absolutely worth looking at,” Yellen said back in February.

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India Looks to Criminalize Trading, Mining, and Holding Cryptocurrencies: Report

India’s Prime Minister Narendra Modi addresses a gathering to mark the country’s 75th year of independence, in Ahmedabad on March 12, 2021.

India’s Prime Minister Narendra Modi addresses a gathering to mark the country’s 75th year of independence, in Ahmedabad on March 12, 2021.
Photo: Sam Panthaky/AFP (Getty Images)

A proposed law in India would make it a crime to mine, trade, or even hold cryptocurrencies like bitcoin in the country, according to a new report from Reuters citing a senior government official. It’s estimated roughly 8 million people in India hold some form of cryptocurrency.

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The move would finalize a government proposal from January that sought to create a digital currency for India while also banning any competitor cryptocurrencies like bitcoin, ether, and dogecoin. But even if the ban becomes law, traders in India might have a healthy grace period.

The latest draft version of the law, which has not yet been made public, would give cryptocurrency owners in India six months to get rid of their holdings before any potential penalties would be imposed, according to Reuters, though several other details are still unclear. For example, it’s not clear what kind of penalties anyone caught holding cryptocurrencies might face, though jail time doesn’t seem to be off the table.

While the Indian government has been hostile to cryptocurrencies for some time, there was recently some optimism in the bitcoin community that India might consider something like a tax rather than an outright ban.

The Central Economic Intelligence Bureau (CEIB), an arm of India’s version of the U.S. Treasury Department, floated a potential 18% tax on all cryptocurrency transactions back in December. That kind of hefty tax would bring in an estimated $1 billion per year, but it now looks like the government will take a much more route action.

Prime Minister Narendra Modi likely has the votes to make the law pass, based on an assessment from Reuters, though it’s not clear what version of the law will eventually become set in stone.

Bitcoin was trading at roughly $57,800 early Monday morning, according to CoinDesk, well down from a record high of over $61,500 on Saturday. Ethereum is at roughly $1,790, and Dogecoin at $0.056.

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