Researchers at the RBC Capital Markets are predicting that the shaky future of Libra may cause China’s central bank-owned digital currency (CBDC) to take lead in the emerging economies a feat that Libra aimed to pull off.
The report was referenced in an October 15 article by the financial new outlet Markets Insider. The article reports that many researchers think that when Libra was announced by Facebook this year, the Chinese government had to speed up its plan to launch a digital currency, which had laid dormant for a long time. RBC in a report sent to their clients said:
If US regulators ultimately dismiss Libra and decide not to draft regulations to encourage crypto innovation in the US, China’s CBDC may be strategically positioned to become the de facto global digital currency in emerging economies.
Libra has been losing backers, back and forth, this month the project has lost more than 4 partners that had previously signed onto the project. Treasury Secretary of the United States Steven Mnuchin believes that the company’s that dropped out of the project did so because of the regulatory uncertainty that haunts Facebook. He said that Libra would be kept under regulatory pressure because the crypto doesn’t seem to be par with the US’s Anti-Money Laundering standards. He said:
If they don’t meet the standards of our money-laundering standards and the standards that we have at FinCEN, we would take enforcement actions against them. I think they realized that they are not ready, they are not up to par and I assume some of the partners got concerned and dropped out until they meet those standards.
However, everything was not doom and gloom in the report, according to the RBC researchers this is a minor setback for the Libra organization and given the right conditions the crypto would be one of the most dominant cryptos on the planet. They think that many big names in tech are willing to join and those that have departed may come back given the condition that the regulatory circumstances change. The report highlighted:
If a clear regulatory roadmap is developed and Libra launches successfully, we would not be surprised to see these firms reapply to the association.