Libra Association rethought the business model of stablecoin Libra amid tight confrontation with national regulators. Now Libra is planned to function as a digital version of several fiat currencies and only after receiving appropriate approvals of the country's authorities.

Facebook and its Libra partners decided to step back from the idea to create a single global stablecoin in favor of launching digital versions of several national currencies, such as the US dollar or euro. The launch of such stablecoins secured by fiat currency deposits and pegged to their exchange rate will take place after receiving appropriate approvals from regulators of the respective jurisdictions. Thus, the Libra Association expects to circumvent the main obstacle to the stablecoin launch, which is the reluctance of US and European regulators.

“Which currency will be adopted and used will vary by use cases,” said Christian Catalini, head economist for Facebook’s Calibra division, which created the project. He suggested that when sending money across borders, the multicurrency Libra could be a better option, whereas the single-currency stablecoins would make more sense for everyday purchases in a consumer’s home country.

The Association also begun negotiations with Swiss regulators to obtain a license of a payment operator and hopes to obtain a similar permit to operpate as a “financial services provider” from FinCEN, the US financial crime service, revealed Dante Disparte, head of policy for the Libra Association. According to him, the Association hopes to bring the project to the stage of readiness by the end of 2020.

When Facebook announced the launch of the Libra project in June 2019, it was about creating a single global digital currency, backed by a basket of fiat currencies that would include euro, US dollar, Japanese yen, and several others, as well as securities such as US treasury bills. This plan was criticized by politicians and regulators, worried that Libra threatens the power of central banks and national monetary sovereignty, and could potentially contribute to illegal financial flows.

Facebook said it would not launch Libra without regulatory approval.