The association formerly known as Libra has been rumoured to be launching in early 2021. But will a name change offer the digital currency project more optimistic prospects than it has had so far?
Brands changing name is a true case of hit or miss for business. Pepsi Cola, for example, began its rise to be one of the world’s most profitable soft drinks with the name Brad’s Drink. In the UK, the fast food chain Pizza Hut briefly rebranded as Pasta Hut in 2008, before subtly reverting back to its original name in what can only be described as a public relations disaster.
Tech companies’ names changes have usually been for the better — when you go to search “Pasta Hut”, you are likely to be using what was once known as “BackRub”. Thankfully, Google’s founders were smart enough to think again. BlackBerry (remember them?) began life as the rather academic-sounding Research In Motion, and the once market-leading Yahoo began as a project called Jerry’s Guide To The Worldwide Web — just a bit of a mouthful.
Executives at the Diem Association, until November 2020 known to the world as Libra, will likely be hoping that it too has made the right decision. In Latin, it means “day”, something referred to in the press statement — which explained the spontaneous choice of name change as a “new day for the project”.
It’s a new dawn. It’s a new day.
Since Facebook unveiled digital currency plans in early 2019, everybody in finance has had an opinion but it is safe to say that it didn’t get off to a good start. PayPal left the association on October 4 that year and then eBay, Mastercard, Stripe, Visa and Mercado Pago followed just a week later.
Although the Diem Association maintains big-name backers such as Spotify and Uber, the departure of so many payments giants has not done much to instil confidence. What’s more, banks have kept away from the project due to potential regulatory burdens, according to rumours.
The plan for a 2020 launch was curtailed by delays — even though e-commerce exploded the world over due to COVID-19. Currently, the Diem Association’s application for a payments licence is with the Swiss regulators.
In the meantime, the Diem Association has been unable to shake suspicion and concerns among governments and institutions.
Not known for being a Silicon Valley ally, the EU unleashed it’s Digital Finance Strategy in September 2020, which included stringent rules for so-called stablecoins — a category into which Diem fits.
Part of the European Commission’s proposal, MiCA (the Markets in Crypto Assets regulation, not to be confused with the noughties pop singer), will be prioritised to pass into law — with the rules on stablecoins already in place as soon as possible to prevent any more sleepless nights for Europe’s finance ministers.
Diem has arguably spurred more anxiety in Europe about sovereignty. The Retail Payments Strategy, also part of the commission’s plans for digital finance, intends to bring payments sovereignty back to the continent — hardly a ringing endorsement of its citizens adopting a currency made by a US tech platform.
Actions aimed at big tech platforms through the Digital Services Act and the Digital Markets Act only further intensify the EU’s attempts to rein in the era of big tech dominance.
Whether the name change was to put the project in first gear for a big launch or to try and quieten the rollout is hard to say. News reports in December suggested that sometime soon, we should expect a slimmed-down version of the Diem currency.
Facebook’s prospects of creating a monetary behemoth are some way off, but that doesn’t mean the project hasn’t already been a catalyst for innovation.
As of last year, many central banks globally are investigating the potential of digital currencies through central bank digital currencies — a buzzword du jour. The threat of a private currency being distributed by a company with a user base larger than the populations of the United States and China combined has spurred central banks into looking to the future.
The question is, who will get their first?