Will the addition of Canadian e-commerce Shopify bring new hope to Libra?

Source of this article: ChainHeadline

Author: Jingya Zhuang

Summary: Many people have had little faith in the prospect of Facebook-led digital currency Libra, and the addition of Shopify seems to bring some new hope to the project.

Recently, Canadian e-commerce giant Shopify officially announced that it has joined the Facebook-led Libra Association.

Shopify said that helping merchants reduce costs and bring business opportunities to developing countries are the main reasons for joining the Libra Association. "In the world, the existing financial infrastructure construction is difficult to meet the scale and demand of Internet commerce."

Shopify CEO Tobi Lutke mentioned on Twitter that digital currency Libra is a way to improve currency circulation and banking. Shopify has been thinking about how to make business better, so it decided to join the Libra Association. Here is the original statement from Shopify:

Libra's director of policy and communications stated that Libra is committed to breaking down financial barriers and creating a secure, transparent, and consumer-friendly global payment system, and the addition of Shopify brings a wealth of expertise to the Libra project.

Since its inception, Libra's development has been uneven.

Looking back less than a year ago, Libra's development path did not go well.

In June 2019, Facebook announced that it would launch the digital currency Libra together with members of the Libra Association. As soon as this news came out, it attracted the common attention of governments and companies around the world. Since then, the development of Libra has also encountered obstacles from regulators. .

In July 2019, the U.S. Congress held a "review of the digital currency proposed by Facebook and its impact on consumers, investors, and the U.S. financial system."

In their view, the strength of the United States comes from the US dollar, and the emergence of Libra not only cannot solve the problem of cross-border remittances, but also poses a huge threat to the long-established US dollar-dominated international monetary system.

At the G7 summit shortly after, G7 finance ministers and central bank governors also agreed that the operation of Libra would affect the operation of the international monetary system. French Finance Minister Bruno Le Maire has said that the privatization of currencies may endanger the sovereignty of countries ’currencies, so Libra cannot be allowed to grow on the continent.

Today, due to regulatory review, many former members of the Libra Association such as Visa, MasterCard, PayPal, eBay, Vodafone have withdrawn, leaving the remaining members under increasing pressure.

However, Facebook has been committed to promoting the development of the digital currency business, not only did not abandon the Libra project, but also continued to make efforts on Facebook Pay and WhatsApp Pay.

Why Shopify Joins Libra Association

The positive significance brought by Libra cannot be ignored.

In Facebook's vision, Libra is a global cryptocurrency that can make cross-border remittances as easy as texting. People can pay immediately without paying huge fees, which will help Shopify and the platform. One million merchants operating on the site saved a lot of money.

In addition, Libra can theoretically be exchanged for local fiat currencies at local brick-and-mortar stores or ATMs.

But to do this, Facebook also needs to convince the US government, the European Union and other countries to convince them that Libra will not help terrorists launder money, violate people's right to privacy, and weaken countries' positions and powers in the global financial system.

So, can Shopify's participation ease the regulatory concerns from governments and organizations?

To some extent, the addition of Shopify has indeed brought a more optimistic prospect to the troubled Libra project. However, Shopify, as an e-commerce platform, is not sufficiently persuasive to join. Only the participation of traditional financial institutions such as Visa, MasterCard, Vodafone, etc., may bring more regulatory confidence to the project.

Conclusion

The Facebook-led Libra project has attracted attention despite many setbacks.

Now, the addition of Shopify makes people see the potential of the project again. Shopify said it will work with Facebook and other project partners to build a new payment network to better support merchants and consumers.

For Libra to get more support, it also needs to ensure that the government does not undermine currency sovereignty, and at the same time make consumers feel its value.

Libra was originally planned to be officially released in 2020, we will wait and see.