How Facebook’s Libra could permanently disrupt the CU industry

On June 18, Facebook announced plans to launch Libra, a new cryptocurrency, and Calibra, a digital wallet, in 2020. It’s tempting to ignore this news because previous wide-eyed speculation over the effect digital wallets, Bitcoin, and blockchain would have on credit unions hasn’t come to pass. But Libra is different.

Credit Union Times shares an intriguing article on the eight reasons Libra could permanently disrupt the credit union community:

1. It will be made immediately available to 2.7 billion people.
2. It’s not just the sheer numbers of people Facebook represents, it’s their data.
3. Libra will operate independently of the central banks and does not currently require approval from Congress or oversight by any banking regulators.
4. Libra will be secured through a basket of international currencies, such as the U.S. dollar, Euro, and Yen.
5. Libra is already supported by 27 key technology partners, which have invested $10 million each.
6. The initial launch will feature a digital wallet that will allow people to seamlessly transfer funds to anyone on the planet and/or easily pay for any product or service they choose, without fees.
7. Libra doesn’t aim to be just another payment alternative.
8. Adoption by consumers will drain credit unions and all financial institutions of deposits.

Author Robert Colvin, president/chief strategist for CU Capital Market Solutions, says this is a watershed event and can’t be ignored. "At a minimum, credit unions must put cautionary funding plans into place as they finalize their budgets and plans for 2020 and beyond," Colvin says.

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The House Financial Services Committee, led by Chairman Maxine Waters (D-Calif.), has scheduled hearings for July 17 to examine Facebook’s proposed cryptocurrency and its impact on consumers, investors, and the U.S. financial system.