Wednesday 16 October 2019 5:41 am

DEBATE: Is the G7 warning the end for Facebook’s libra?

Ana Bencic is president of Nexthash.
Don Guo
Don Guo is chief executive at Broctagon Fintech Group.

Now that the G7 has issued a warning against the cryptocurrency, is this it for Facebook’s libra?

YES, says Ana Bencic, president of Nexthash.

Facebook’s libra is the most high-profile example of a centralised cryptocurrency and is a living example of how it will be perhaps the last one to exist. The G7’s warning to Facebook and its other stakeholders is likely to be the final nail in the coffin for these types of currencies for years to come.

This doesn’t seem to happen with centralised coins with a massive reach that are seeking approval from government regulators.

Facebook has entered into a regulatory debate. In the global marketplace, regulation is the essence of the value of these kinds of ventures, and future players should be aware of this to not meet the same issues.

The decentralised and sometimes volatile nature of other coins, such as bitcoin, makes them useful tools with different qualities to sterling and other government-backed currencies. They can be and will remain an attractive alternative to both investors and traders alike, particularly in the global market.

NO, says Don Guo, chief executive at Broctagon Fintech Group.

It’s no wonder that the G7 feels threatened – libra represents the first stable digital currency which could be a feasible alternative for the mass market. And while these regulatory moves may have spooked the likes of Paypal, Mastercard and Visa into abandoning the project, it will unlikely be enough to stop libra in the long term.

What governments and businesses alike have yet to realise is the opportunity cost of dropping out at this stage. Across the globe, new digital payment systems like WeChat Pay are taking off, and with Facebook and WhatsApp’s global community, libra has the potential to take this to the next level by creating a bigger, more global version that could unite the world’s payment systems. 

Those players that don’t get involved now could find themselves left out of the upcoming digital payments revolution. 

As a result, in a few years’ time it could well be Paypal that is knocking at Facebook’s door, rather than the other way around.

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.