Facebook’s Cryptocurrency Libra and Digital Wallet Calibra

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Facebook Inc (FB.O) unveiled ambitious plans for a cryptocurrency called Libra in June. The initiative quickly encountered resistance from regulators around the world.

France and Germany pledged to block Libra in Europe and instead supported the development of a public digital currency.

Facebook aims to launch Libra in the first half of 2026. The project is to be governed by an independent association of corporate members and non-profit partners.

The Coin

Libra is designed as a digital currency backed by a basket of real-world assets, including bank deposits and short-term government securities, held by a network of custodians.

This structure is intended to build trust and help stabilise the coin’s value.

Although Libra’s price may not always match the exact value of the underlying assets, users should have a “high level of confidence” that they can exchange coins for traditional currency at prevailing market rates, according to the project’s documentation.

Libra will be available through a network of exchanges that Facebook has not yet named.

Technology

Libra transactions will be processed and recorded on a blockchain — a distributed ledger maintained by a network of computers.

The Libra blockchain will initially be permissioned, meaning only entities approved by the governing association can operate validating nodes. This model differs from Bitcoin, which operates without central oversight.

The software will be open source, allowing developers outside the association to build applications on top of it.

The association plans to transition toward a permissionless blockchain within five years of launch.

The Association

The Libra Association is a 21-member independent non-profit organisation based in Geneva, Switzerland. It will oversee major decisions regarding the digital currency.

Members include Uber Technologies Inc (UBER.N) and Vodafone Group Plc (VOD.L), as well as venture capital firms Andreessen Horowitz and Thrive Capital.

The initiative suffered a setback in October when several high-profile financial firms, including Mastercard, Visa and PayPal, withdrew from the project.

With the exception of non-profit members such as Kiva, joining requires a minimum investment of $10 million (£7.8 million). The association targets 100 members by launch.

Each member will hold one vote on key matters. Facebook will participate through its subsidiary Calibra, which will provide a digital wallet for Libra.

The Wallet

Users and merchants will be able to store, send and receive Libra via the Calibra wallet.

The wallet will be available as a standalone smartphone app and as an integrated feature within Facebook’s Messenger and WhatsApp platforms.

Facebook ultimately intends to enable Calibra transactions across its entire family of apps, including checkout options on Instagram.

The company hopes to generate revenue from its messaging services through payments and transfers — a model already successful on platforms such as WeChat in China.

Users will be able to purchase Libra in the app by linking a bank account or, for those without banking access, at physical locations such as money-transfer agents and convenience stores.

Calibra engineers are contributing to blockchain development, although Facebook has stated that the currency and wallet will remain separate entities.

Calibra currently employs around 100 people, primarily based at Facebook’s headquarters in Menlo Park, California, and in Tel Aviv. Executive Kevin Weil told Reuters he does not anticipate significant near-term headcount growth.

Privacy and Security

Every Calibra user will undergo a “know your customer” verification process to help prevent financial crime.

This requires sharing a government-issued ID and other personal information upon signup.

Calibra will assist users who lose passwords or devices and will refund customers whose Libra holdings are stolen through fraud, according to Facebook.

Calibra will share user data with Facebook or third parties only with customer consent or in limited circumstances, such as when required by law enforcement.

Facebook has pledged not to use Calibra data to improve advertising targeting.

Merchants will receive the same level of customer information when accepting Libra payments as they do with credit-card transactions, Weil told Reuters.

Regulation

Regulators have expressed concerns about Libra’s potential impact on the financial system, consumer privacy and its possible use in money laundering since the project’s announcement.