Why Facebook’s Libra Hangs In Limbo—And What’s Next In The Digital Currency Race

The decor inside the offices on Facebook’s campus in Menlo Park, Calif., can best be described as “unfinished.” Steel girders crisscross overhead. Piping and air ducts pop out of plywood walls. Lighting, fire alarms, and support structures dangle from the underside of the floor above—all exposed to view.

The state of incompletion is not for want of funds. Despite scandals, Facebook continues to post record profits—$6.1 billion in the most recent quarter. Rather, the inchoate quality intentionally reflects the design philosophy of Mark Zuckerberg, the company’s founder and autarch. Zuckerberg likes to say that Facebook is only ever 1% finished. So the space appears under perpetual construction.

The stripped-down look feels particularly appropriate in Building No. 52. These are the offices that incubated Libra, Facebook’s audacious digital payments proposal. Here, the incompleteness creates the impression that the company isn’t certain whether to continue construction or just close up shop. And after the brutal reception that greeted Libra’s rollout over the summer and fall, you could hardly blame Facebook if it opted to not only shut but also raze the place. Nonetheless, the company remains committed to launching Libra—and so a team of engineers continues to toil here.

Facebook and the partners it has recruited aim to create a new kind of money, backed by a basket of international currencies—such as the U.S. dollar, the euro, and the Japanese yen—and based on blockchain technology. The currency backing would make Libra a “stablecoin,” a digital cur­rency that maintains a relatively stable value, unlike Bitcoin and other cryptocurrency forebears, and which can be used as a planet-wide medium of exchange. After coming up with the idea, Facebook corralled more than 20 other firms into the (technically independent) Libra Association. The pitch: They could own a stake in a supranational currency that could extend financial services to the world’s 1.7 ­billion “unbanked” people, knock down obstacles to e-commerce, and generally make it easier and cheaper for money to fly around the globe. Or they could miss out.

Libra’s critics see far more threat than opportunity. The project is unique for having touched off an international firestorm before coming anywhere close to launching. At this point, Libra “is probably the best-known startup without a product that ever existed,” says Patrick Ellis, general counsel of payment processor PayU and a Libra Association board member.

When the Libra project was announced in June, the pile-on continued publicly. Federal Reserve Chair Jerome Powell said he had “serious concerns regarding privacy, money laundering, consumer protection, and financial stability.” President Trump tweeted that Libra “will have little standing or dependability.” India’s top economic official dismissed its viability. Bruno Le Maire, France’s economic minister, called Libra “a threat to national sovereignty”—and spearheaded its prohibition in the European Union. By mid-October, seven of the Libra Association’s biggest prospective participants—including payment titans Visa, Mastercard, PayPal, and Stripe—had backed out amid fears of hostile regulatory scrutiny.

Regulators’ concerns were hardly unfounded, and Facebook aggravated matters by being underprepared to address many of them. One prime sticking point: How would Libra comply with know-your-customer and anti–money laundering laws to prevent misuse? Facebook had already demonstrated a reluctance and inability to police its media platforms—so how could it be trusted to police a new form of money? While security experts tell Fortune it should be possible to track the flow of assets through Libra, given the network’s design, skeptics aren’t convinced. “There are people who go to a western, and they root for the bad guy,” says Rep. Brad Sherman (D-Calif.), who heads a House subcommittee on capital markets. “Libra may very well succeed—in facilitating terrorism, drug dealers, human traffickers, and especially tax evasion.”

Critics also saw Libra as a threat to global financial stability. Deployed to Facebook’s 2.8 billion users, a Libra coin might attain a scale that diminished the standing of the U.S. dollar and other fiat currencies and the sovereignty of the world’s central banks. ­Especially galling to many was that the association would empower a council of ­private-company representatives to tweak the composition of the currency basket by which Libra would be backed. “I back off at the concept of a global consortium potentially having so much power,” says David Andolfatto, an economist at the Federal Reserve Bank of St. Louis. “Unless you elect Jesus to run it, you’re putting a lot of faith in mankind.”

A censorious Congress raked Zuckerberg himself over the coals during a House financial services committee meeting on Oct. 23. “I don’t actually know if Libra’s gonna work,” he admitted.

And yet, for all that, Facebook and its allies are plowing ahead. The Libra Association still counts 21 corporations, startups, venture capital firms, and NGOs as members. Uber, Lyft, Spotify, telecom multinational Vodafone, and cryptocurrency broker Coinbase are among those still on board. And the association says it still hopes to launch Libra in 2020.

In an interview just two days after Zuckerberg’s House testimony, Marcus—who heads Calibra, Facebook’s Libra-focused digital wallet subsidiary—exuded sanguinity. “I’m a ‘glass half-full’ kind of guy,” he says, draping an arm over the back of his chair in one of several Calibra conference rooms named after Bill Murray flicks. (This is the What About Bob? room.) “Everyone is now talking about digital currencies around the world—everyone. And if it hadn’t come from us, that timeline—to make progress in having the right framework for digital currencies—would have taken much longer.”

Indeed, the race for a global e-currency has only grown more heated since Facebook’s face-plant. Banks, other tech companies, and national governments—most notably, China’s—are readying digital currency pilots of their own; Libra’s stumbles might ease the path for those that come later, or at least force regulators to clarify what they’ll allow. Libra itself, meanwhile, promises to course-correct based on the (often scorching) feedback it has received.

How will Libra, or any new currency, satisfy global regulators? What will it look like in its final form? Will Libra be the first globally viable, price-stable e‑cash? Or will someone else beat the association to it? To explore those questions and others, Fortune canvassed the financial and digital worlds for this account. – Fortune