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When Facebook initially announced its cryptocurrency project Libra in June, Brad Garlinghouse, the CEO of blockchain company Ripple, was ecstatic. Garlinghouse was so excited by the project—and the uptick in interest it had also generated for Ripple—that he sent Libra’s creator some celebratory champagne, he said at Fortune’s Brainstorm Finance conference at the time.
Now, as the Libra project faces potent opposition by regulators, Garlinghouse doesn’t believe Facebook will be able to launch it for at least three years—if ever.
“I would bet that Libra…let’s say, by the end of 2022, I think Libra will not have launched,” Garlinghouse says on the latest episode of Fortune’s “Balancing the Ledger.” (In making the hypothetical bet, he references the over-under betting style used on blockchain betting platform Augur, which combines time frames with wagers on various propositions.)
Asked whether he was bullish that Facebook could follow through on the vision it originally laid out for Libra, Garlinghouse simply says, “No,” adding “the regulatory headwinds they’re facing are substantial.”
(Ripple, which makes technology that facilitates cross-border transactions between banks, is not involved with Libra, which aims to create a cryptocurrency that consumers could use to send money to each other. Though Ripple and Facebook do not currently compete for business, it’s possible they could one day.)
While Garlinghouse was in Fortune’s studios taping this segment, PayPal, one of the first backers of Libra as a founding member of the cryptocurrency’s governance association, announced that it would no longer participate in the project, adding to doubts about Libra’s future.
Even before Facebook unveiled Libra, a cryptocurrency that could potentially be used in place of U.S. dollars and other state-issued currencies, it was already battling controversy over its collection and use of consumers’ data—a problem that may have interfered with Libra’s prospects.
“I think maybe [Libra] would have been better received if Facebook had not been the point of the arrow,” Garlinghouse explains. “Facebook has been in the crosshairs of a bunch of governments around the world.” Though Facebook has indicated it won’t launch Libra without regulators’ blessing, Garlinghouse isn’t confident the company will ever reach that point: “I think it’s going to be a tough road.”
Ripple itself has dealt with its share of regulatory scrutiny, particularly over whether the cryptocurrency XRP, which Ripple uses in many of its cross-border transactions, should be classified as a security, which would subject it to additional rules and oversight by the U.S. Securities and Exchange Commission. The SEC recently fined another blockchain company, Block.one, $24 million for failing to comply with securities laws in its sale of the cryptocurrency EOS. Garlinghouse, however, is sanguine about the risks of Ripple facing similar obstacles, saying that its relationship to XRP is different than Block.one’s connection to EOS.
“One really important distinction is, the XRP ledger existed before Ripple the company,” Garlinghouse says. “Certainly we are an interested party in the success of the XRP ledger, for sure—we own a lot of XRP. But it’s a little bit like saying, Exxon owns a lot of oil. That doesn’t make oil a security.” Oil, of course, is classified as a commodity.