Libra recently rebranded the project, but the German Finance Minister argues that it takes more than just a change of name to address the project’s regulatory concerns
Changing a name doesn’t solve the regulatory concerns regarding a company, commented the German finance minister while addressing the issue of Libra’s recent rebranding.
Facebook’s Libra cryptocurrency project recently rebranded to Diem as it anticipates a 2021 launch. The rebranding is to further distance the project from the original Facebook-led vision that was revealed last year.
Diem is composed of 27 member firms, and they are working on launching the Diem dollar in January. It is unclear if Diem would get the necessary regulatory support or approval to achieve its objection within the next few weeks.
According to the project head, rebranding to Diem will demonstrate the project’s independence from Facebook. However, not everyone sees it this way. The German Finance Minister Olaf Scholz shared this view and stated that Libra’s problems don’t go away because it changed its name.
Scholz made this statement after a video conference of G7 finance ministers at which cryptocurrencies were discussed. He stated that Libra’s regulatory problems remain, and it would be hard to authorise the cryptocurrency’s launch in Europe and Germany if it doesn’t address those issues.
The minister added that changing the name is only a cosmetic change as they are yet to change the core mode of operation. He stated that “A wolf in sheep’s clothing is still a wolf“. The minister further added that he believes Germany and Europe cannot and will not accept Diem’s entry into the market if the regulatory risks are not adequately addressed.
One of the major regulatory issues regarding the Libra project is financial control. Scholz pointed out that regulators must do what it takes to ensure that the currency monopoly remains in states’ hands.
Facebook launched the Libra project in 2019, but it continues to face backlash from regulators and government officials globally. Regulators disapproved of the project because of Facebook’s direct involvement. Currency control has always been in the hands of the states, and Libra would affect the dynamics if approved.
It is unclear if Diem would get the necessary regulatory support to launch the stablecoin in various countries globally. It would be more challenging for the project to gain mass adoption as countries worldwide are now developing or testing various versions of their central bank digital currencies (CBDCs).