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Most European Regulators Have Scrutinized Facebook's Libra, Except One: Who’s the Odd One Out?

What happened recently with the Libra Association?

Made up of more than two dozen companies and based in Geneva, a few of the founding members, including PayPal, Mastercard, Visa, Stripe, Booking Holdings, and eBay, decided to leave the Libra project. A five-member board governance board was formed after the Libra Association reaffirmed its commitment by holding its inaugural meeting in Geneva, Switzerland, on Oct. 14.

However, the Libra Association quickly defended, saying, “we’re better off knowing about this lack of commitment now, rather than later.”

Libra announced that the launch was planned for June 2020; however, the global watchdogs stated, “we are surprised and concerned that this further detail is not yet available.” On Sept. 16, Libra representatives met with the Committee on Payments and Market Infrastructure (CPMI), a part of the Bank for International Settlements (BIS) – a group for 60 central banks and monetary authorities across the globe to discuss the regulatory hurdles around stablecoins developed by large corporations.

Despite the global uncertainty of the stablecoin, the Libra Association will continue with its plan to launch with the 100 members initially envisaged when it was announced in June. The association also believes that new financial and banking partners will be joining.

The European Union

Benoit Coeure, an executive at the European Central Bank, warned that regulators are cautious of cryptocurrencies by large corporations similar to Libra. He mentioned, “as a new technology, stablecoins are largely untested, especially on the scale required to run a global payment system. They give rise to a number of serious risks related to public policy priorities.” He believes that Libra needs to be well understood and thoroughly tested in a real-world environment to see whether it is scalable to run a global system for its official launch.

The executive branch of the European Union sent a questionnaire to Facebook and the Libra Association regarding clarification about the stablecoin. These questions come after the European Union antitrust regulators’ preliminary investigation into Facebook’s plans. The EU regulators were concerned about the use of information and data, along with the integration of Libra wallets with WhatsApp and messenger services.

However, Dante Disparte, Head of Policy and Communications for the Libra Association, stated, “the Libra Association welcomes this public policy dialogue and multi-stakeholder process that will help unleash the economic and social potential of digital currencies.”

Valdis Dombrovskis, the European Union’s finance commissioner, pledged to propose new rules to regulate cryptocurrencies similar to Libra. Dombrovskis’ served as Latvia’s prime minister and finance minister and was a member of the European Parliament from 2004 to 2009. If reappointed as the Executive Vice President of the European Commission, Dombrovskis would be handling “An Economy that Works for People” and will be working to “deepen Europe’s economic and monetary union.” Dombrovskis advocated for the EU’s need to address “unfair competition, cybersecurity, and threats to financial stability.”

The European Commission

Margrethe Vestager, the Executive Vice President-Designate of the European Commission, questioned the motives behind Facebook’s Libra stablecoin. Vestager addressed competition as a possible impact from Libra’s launch due to Facebook’s multimillion user base and a distortion of competition in the payment services market.

Vestager added:

“It’s a pretty new thing that we are starting to question something that does not exist yet. But it is so far in the future that we cannot tell if this is going to be a problem. And the problem may be that you get a completely closed ecosystem that has nothing to do with the rest of the economy.”

Vestager further questioned, “What does it mean that you have your own currency that works within this space — and which can only be used within this space? So, what about the values that get caught there? Those who sell with the Libra as a means of payment then get a special advantage over those who come and want to pay in all sorts of other ways?”

France

France said in September that it would be blocking the development of Facebook’s Libra in Europe. Bruno Le Maire, French Finance Minister, said that plans for Libra could not move ahead unless concerns over consumer risk and governments’ monetary sovereignty were addressed. Le Maire commented on virtual currencies:

“I want to be absolutely clear: In these conditions, we cannot authorize the development of Libra on the European soil.” He added, “the monetary sovereignty of countries is at stake from a possible privatization of money… by a sole actor with more than 2 billion users on the planet.”

Le Maire also mentioned that there is a risk of countries having to bail out the currency if it goes under and facing other risks such as money laundering on a more challenging level, and terrorism financing. He suggested that Facebook could look at creating another separate “public digital currency.” Another concern that Le Maire expressed was that Libra might “substitute itself as a national currency” and potentially cause financial disruption. He said, “I don’t see why we should dedicate so much effort to combating money laundering and terrorist financing for so many years to see a digital currency like Libra completely escape those regulatory efforts.”

However, Disparte said that Le Maire’s comments emphasized the importance of the project’s backers working together with global regulators. He clarified, “We recognize that blockchain is an emerging technology and that policymakers must carefully consider how its applications fit into their financial system policies.”

Germany

Along with the French, Germany’s finance minister has also been against private currency projects like Libra, although support the digitization of the euro. Olaf Scholz, German Federal Minister of Finance, stated that he would be keen on developing an “E-euro,” claiming:

“A payment system like that would be good for Europe as a financial center and its integration into the world financial system.”

However, he also commented by saying he is “very, very skeptical” of Facebook’s stablecoin, and added, “a core element of national sovereignty is currency issuance; we would not leave that to private businesses.”

Portugal

Ricardo Mourinho Felix, Portugal’s Secretary of State for Finance expressed concerns about Libra in early October, announcing that it should not circulate in the market until the risks it could pose for the current financial system are mitigated.

Felix addressed Facebook’s stablecoin at a conference, “it is clear from the outset that is a high-risk phenomenon with systemic implications. It is essential that no ‘stable currency’ project like Libra – is launched until all concerns have been duly addressed.” He further highlighted that Portugal also shares the same concerns as stated by other European countries regarding Libra.

Felix highlighted the “risk that Libra could limit the reach of traditional monetary policy tools,” and could have a significant effect on the policies which today promote the stability of the financial system.”

Switzerland

Mark Branson, the Head of the Swiss Financial Market Supervisory Authority (FINMA) has concerns with the crypto projects that develop without being thoroughly questioned by the officials rather than about Facebook’s Libra.

Branson stated at a Bloomberg event in Zurich, “I am much more nervous about projects which develop in a dark corner in the financial system somewhere, spread themselves out through cyberspace and one day are too big to be stopped.”

He mentioned that Switzerland would not be putting up “extra hurdles” in front of the project. However, Libra will be under strict rules that typically apply to banks and on top of unbending anti-money laundering laws. “We are not here to make such projects impossible. We will respond to them with an open mind, with an attitude that same risks require same rules,” said Branson.

United Kingdom

Mark Carney, Governor of the Bank of England, has been defending Facebook’s decision to create a new currency. According to news outlet TheStar, Carney highlighted the limitations of the current traditional financial system. Carney believes that Facebook and other similar firms should be involved in projects like Libra.

With the high costs of transactions, small businesses are charged as much as 200 basis points per transaction, Carney further explained, “that’s not good enough in this day and age. Those payments should be instantaneous; it should be the same as us exchanging a banknote online. It should be virtually costless, and it should be 100 percent resilient.”

The United Kingdom’s central bank also presented its latest Financial Policy Summary and Record at a Financial Policy Committee (FPC) meeting that was held on Oct. 9. The document presented the resilience of the UK Financial system, discussed the innovative developments in the payments sector while highlight Libra has a great chance to become “a systemically important payment system.”

Images via Shutterstock

Image source: Shutterstock

Why Facebook's Libra Is Not A Real Cryptocurrency

First of all, the Libra white paper does not mention anything about the United States. There is not a single reference to the dollar, US regulatory system or legal structure. This is ironic because the founding members of Libra come from an American company. In the past, Soros sponsored hedge funds had caused trouble in the United States and were warned by the United States government for their unconventional (and unethical) practices. In other words, the hedge funds could operate in other countries but were banned in the USA. Because of this Soros had nearly destroyed the pound and resulted in the Asian Financial Crisis of 1997.

Since Libra is fully controlled by Wall Street we can strongly predict that Libra will not be popular in the USA as many Americans are discouraged by Wall Street corporations. However, Libra will be popular in other countries, especially those with unstable currency.

Secondly, Libra’s white paper, and their reserve assets and operating models say they are based on gold, euros and the Hong Kong dollar without a single mention of the US dollar. Early use of several currency deposits, as well as credible government short-term bonds, were used as Libra’s reserve assets. Libra also aims to establish stability and reputation, but it will transform into a completely open system over time.

In other words, in the early stages of replacing the fiat currency with Libra, we need to guarantee credible reserve assets but gradually will form its own value system. In the future, Libra will decouple from reserve assets and become a new independent world currency. This should be very similar to the 1971 US dollar. After the completion of internationalization, the US dollar separated from gold because of the need for more flexibility.

Thirdly, Libra can be understood as the Hong Kong dollar model. Hong Kong does not have a central bank. Banks can issue money directly, but if you want to issue Hong Kong dollars, you must pay a fixed percentage of the US dollar to the Hong Kong government. Libra will be the same in the next few years. The global cooperation agencies can obtain Libra by paying fiat currency to Libra. Then these cooperatives, like market makers, can carry out two-way exchanges between fiat currency and Libra with ordinary users.

It should be noted that Libra’s reserve assets are not a single currency, so the exchange rate is not solely the rate of the US dollar and your country’s fiat currency, it is a basket of exchange rates. But the dollar will still occupy a large portion of the entire reserve thus continuing to stimulate the exchange among global users. If the development is relatively rapid, the currencies of small countries may accelerate the depreciation or disappear, some governments may even accept Libra to pay taxes and expenses.

Libra has a very similar mission with Bitcoin. When we read the Libra white paper it is as if we read an expanded version of the 2008 Bitcoin white paper, it’s almost as if the two came from the same group or team.

If the white paper on Bitcoin in 2008 was to use a blockchain approach to create a technical currency that transcends sovereignty, then today’s Libra white paper is actually a comprehensive commercial application, based on a blockchain technically credible issue proved by Bitcoin. This is similar to the trending 5G network, starting from a long-term test of one or two base stations and then entering the large-scale commercial phase.

Bitcoin and Libra both try to solve the same problem, high transaction costs of daily micro-payments. This problem seriously affects the popularity and inclusiveness of financial resources around the world from these developers.

Libra’s mission is to enable a simple global currency and financial infrastructure that empowers billions of users.

This document outlines our plans for a new decentralized blockchain, a low-volatility cryptocurrency, and a smart contract platform that together will aim to create a new opportunity for responsible financial services innovation.

Working together, technology companies and financial institutions have found solutions to help increase economic empowerment around the world. Despite this progress, large swaths of the world’s population are still left behind — 1.7 billion adults globally remain outside of the financial system with no access to traditional banks, even though one billion have a mobile phone and nearly half a billion have internet access.

Whereas today, access to financial service is limited or restricted to those who need it most — those impacted by cost, reliability, and the ability to seamlessly send money do not have access to necessary services.

All over the world, people with less money pay more for financial services. Hard-earned income is eroded by fees such as remittances, wire costs, overdraft, ATM charges, and many others. Payday loans can charge annualized interest rates of 400 percent or more, and finance charges can be as high as $30 just to borrow $100. When people who are “unbanked” are asked why they remain on the fringe of joining the existing financial system the answer is usually the same. Those who remain “unbanked” indicate that not having sufficient funds, high and unpredictable fees, banks being too far away, and lacking the necessary documentation are the main reasons for this.

Micro-payments in developed countries such as the United States must pass through banks and credit card systems making transaction costs very high. This is not the case in China as this problem has been solved by the implementation of mobile payment. China’s mobile payment can maximize efficiency by transferring a red envelope, while the United States has to mobilize its bank settlement systems in order to transfer funds. Because of these problems and the delay of mobile payments by traditional financial institutions, it has directly stimulated the birth of Bitcoin and Libra.

So what do we reflect on, what are we losing after we gain the advantage of mobile payment?

Image source: Unsplash

US Senator Sherrod Brown: Facebook is delusional

“Mark Zuckerberg said that Facebook is more like a government than a company. That’s delusional.” US Senator Sherrod Brown said in a video tweet by NowThis News.

The video was released a few hours after Facebook’s hearing with the Senate Banking Committee. In the video, Brown added “We have to protect our democracy. We should be making it harder, not easier to concentrate so much power in big corporations like big banks and big tech companies like Google and Facebook.”

Brown raised a serious concern on Facebook having an ability to force users to use their own product to create new monopoly money. He asked, “what happens when Facebook forces businesses to quit accepting your credit card or your debit card? You could be forced to use Facebook’s new monopoly money. What about small business owners, forced to use it, or lose access to Facebook’s millions of users?”

During the hearing on Facebook Libra, Brown remarked: “We’d be crazy to give them a chance to let them experiment with people’s bank accounts.” Senator Martha McSally shared the same sentiment with Brown. She said, “instead of cleaning up your house you are launching into a new business model.”

David Marcus, Head of Calibra emphasized the separation between social and financial data during the hearing. He said, “the way we’ve built this is to separate social and financial data because we’ve heard loud and clear that they don’t want those two types of data streams connected, so this is the way the system is designed.”

Marcus also stressed that Facebook is not aiming to compete with sovereign currencies. He added, “Facebook will only have one vote and will not be in a position to control the association, nor will Facebook or the Libra Association position themselves to compete with sovereign currencies or interfere with monetary policy.”

Huawei’s CEO Responds to Facebook: China Can Issue Its Own Libra

Ren Zhengfei, CEO of China’s Huawei believes that China can create their own digital currency in response to Facebook’s Libra.

In an interview with the Italian media, in response to a question, Ren Zhengfei responded with “China can also issue such currency by itself. Why wait for others to issue it?”

Reported earlier this month, China’s central bank, the People’s Bank of China believes that Facebook’s Libra could be a sign of a threat to China’s economy. China could be in a major disadvantage if Libra were to be pegged to the U.S dollar.

The director of the People’s Bank of China research bureau, Wang Xin stated that the bank has decided to create its own digital currency due to the lack of clarity of the U.S dollar once Libra is issued. He also stated that there could be economic, financial and political consequences.

Images via Shutterstock

Blockchain, Bitcoin, Libra, Facebook

I’ve been told my “definition” of Blockchain differs from the “commonly used” one.

This is probably true, so I decided to examine why.

First of all, what’s meant by “commonly used”. I have a problem with this idea because I’m yet to understand the parameters of “commonly used”, and am still trying to understand what anybody is actually referring to when they begin to throw the word “blockchain” around [with so much certainty].

A number of years ago, I found myself personally entangled in the term “blockchain”, attempting to explain it to people at the local “bitcoin & blockchain” meetups I was hosting. The argument centred around grouping data in blocks & cryptographically hashing it to the data in the previous block in an attempt to build some form of “immutable ledger” (another term that gets thrown around) that could act as the basis of a more secure method of data storage.

Whilst on the surface, this sounds interesting, in reality it’s neither special, unique, profound or even useful.

I still remember the “aha” lightbulb moment where I realised that this concept was not the basis of Bitcoin’s immutability, & that immutability of the historical data on the ledger had very little to do with hashing to the previous block & everything to do with using that data structure/methodology together with the economic game of probability that Bitcoin used to achieve autonomous consensus (ie; its inclusion of PoW in its solution to the Byzantine Generals problem, aka; Nakamoto Consensus).

What I’ve since informed anyone I come across (or at least those who choose to listen) is that defining “blockchain” outside of the context of Bitcoin is like trying to define a carburetor without the existence of a car.

Blockchain for Lettuce

The sad truth is that since Bitcoin’s inception, there have been many, many attempts to take absolutely necessary parts out of the Bitcoin Recipe (see page 5 of https://bitcointimes.news) in order to deliver something called a “blockchain” – for just about every application imaginable.

When one tries to understand the application or definition of their ‘blockchain’, you quickly realise it’s just a glorified database, utilising some simple time stamps, & maybe data segmentation. Something we’ve had for decades, & in most instances, the use of which is completely pointless.

In a bid to stay ahead of the curve, the “blockchain” narrative evolved into “DLT“; standing for Distributed Ledger Technology, where the “block” part of the blockchain was removed & the “distributed” element (also part of the broader Bitcoin recipe) was now glorified. The new narrative is just a variation of the old. “It’s immutable because every validator has a record of the ledger”.

The problem this time around is that if every validator is known, or permissioned, then have we really created something new? One could argue that in some corporate applications where more checks & balances are required, or there is a need for shared decision making, this could be useful, but by no means is this immutable, broadly applicable, or as one of the ridiculous narratives goes; “faster”.

Having more parties participate in validation is by definition slower – and that’s fine – especially if you want more checks, but digital immutability is a binary term. You either have it or you don’t. The private, permissioned distributed ledgers are not immutable in any way, because there is no cost to change the historical record – only a requirement to collude via the quorum of the group. If anything, DLT is just a glorified multi-party authentication system – which like I said, is fine in some cases – but not when painted with “all the glorious things” it’s going to give the world.

Open, decentralized networks [insert blockchain word here] such as Bitcoin are immutable, distributed & happen to group transactions together to achieve autonomous consensus amongst network participants who do not know each other. The result is a digital network that is inherently tied to real world cost via real-world energy. The more energy & cost associated with the network, the greater it’s degree of immutability.

Therein lies the innovation.

It is unprecedented & its application to something that requires an extraordinary degree of censorship resistance, eg; a non-sovereign form of monetary unit, is where “the killer app” lies.

Not IBM’s “Blockchain for Lettuce”.

Is this recipe useful anywhere else?

Many have argued that using the entire Bitcoin recipe, & applying its output (ie; digital immutability & censorship resistance) to things outside of a non-sovereign monetary network + unit is a good idea. Enter Ethereum, etc.

Whilst I won’t go into the details here, I am very skeptical of the need to apply immutability & censorship resistance (or make it an integral component of the stack) to many things in the world due to the inherent cost of doing so.

I’m extremely skeptical of the idea of “Dapps”. Even if we assume Ethereum is censorship resistant (the numbers don’t add up), & that the Dapps are also actually decentralized (they’re not), how many applications really need to have immutability or resistance to censorship as a native part of their stack? Maybe an “ebay for Hitmen” – but by & large, if you have an idea for an app, in today’s day and age – just go spin up an AWS instance, and make it happen!

Bitcoin’s unique recipe is very useful for a specific set of things, much like building a tank is useful for a specific set of things. Putting the tank on a race track or removing all the armour to make it faster & then sending it into battle are both misguided.

The Verdict?

The world Blockchain was popularised in 2013 & 2014 by groups of banking consortiums, who are inherently threatened by the disintermediation that Bitcoin presents.

Seeing the banks, accounting & IT giants, like the Big 4, the IBM’s & Accenture’s of the world, tout DLT or Blockchain is just classic PR. They’re announcements by large, (in most cases boring) corporates who are desperately trying to show that they’re still somehow “innovative”.

Similar to how they use (and exaggerate) the words “cloud”, or “Ai”, or “big data”.

There is very little innovation there. So I call Bull$#*%.

Onto Libra

Libra has red-pilled more people into Bitcoin recently than just about anything else.

The idea that a non-sovereign currency can be issued, by an entity which is not a government or a state has actually opened the minds of millions of people who could not perceive that earlier.

The fact that Facebook has circa 2bn people on their network makes it the largest community (country) in the world, & people’s ability to grasp the notion of that community having their own money is a much easier mental leap.

Once they make that leap, they then have an easier time understanding Bitcoin, as seen by the journey people like Joe Kernan from CNBC Squakbox are on.

Whilst Facebook has used the term “Blockchain” in their definition of what Libra is, it’s actually an inaccurate representation. I won’t do the argument as much justice as Jameson Lopp did, so I’ll link to his article here:

https://onezero.medium.com/thoughts-on-libra-blockchain-49b8f6c26372

But suffice it say; it’s not a blockchain.

In fact, Facebook & the Libra consortium have ZERO interest in building their own “blockchain”.

What they’re attempting with Libra is something so much larger, & it’s exactly why all the governments (big or small) are up in arms about it.

Let’s think about it for a moment.

– Libra is in direct competition with government based fiat currencies (and they all know it)

– Consider what a population in a jurisdiction with a weaker national currency would do if LIbra launches there. Why would a citizen hold their hard earned wealth in something that’s depreciating by 10 – 20% per annum?

– You quickly come to the realisation that there would be a “bank-run” on the national currency, with all the capital flowing onto Libra. The result would be catastrophic for the government in power, as it’s economic lever is the basis of its control of the population.

Governments are scared — and rightly so.

Facebook is arguably the largest “country” in the world, & their currency would be more useful to more people than the fragmented fiat ones they’re using today.

This is the real play. Libra is attempting to do their own Bitcoin – they couldn’t care less about Blockchain.

Bitcoin is the “Killer App”.

Bitcoin is fundamentally unique.

Its immaculate conception & organic introduction to the market, its initial broad based adoption for strong, libertarian reasons & the timely disappearance of the founder, leaving no “head of the snake” to cut off are just a few of the things that make it impossible to replicate.

Digital scarcity, Bitcoin’s core innovation is by definition, a one-time event. Every other cryptocurrency, optimising for complex, turing complete smart contracts on the base layer, or faster payments are quickly being shown as irrelevant or short term noise.

Bitcoin’s focus on being a censorship resistant public network, owned by the participants, that’s broadly decentralised & organically priced by the market is the killer app.

Libra by facebook reinforces all of the above, by making all other cryptocurrencies who optimised for the wrong thing obsolete, & giving us a strong contrast to what Bitcoin represents for the world, ie; a money of & for the people — that cannot be shut down, censored, confiscated or inflated.

This was a once-off opportunity.

The smart money knows this & Bitcoin will continue to suck up all the capital & liquidity whilst all the other noise (crypto) will continue to trend toward $0 against Bitcoin in both dollar terms & relevance.

Bitcoin VS Libra: The real showdown.

Libra inherently validates Bitcoin.

It opens people’s minds to the idea of a floating, global currency that is not managed or issued by a state of government.

The question is, would you use it?

Or would you prefer to use something like Bitcoin?

Whilst there are similarities between them, I would argue that Bitcoin is the antithesis to something like Libra, which to me sounds like we’re jumping from the frying pan into the fire.

Whilst I’m not a fan of government or central bank-decreed fiat money, I question the logic of moving from a global USD reserve to a Libra reserve.

Sounds a little like 1984 to me.

Not to sound conspiracy theorist, but the idea of one party, or even a consortium of the “big boys” having the final word on the most important resource in society, ie; money, ie; the unit of account that measures the input of all participants in society + the world at large → sounds dangerous to me.

This, fellow readers, is why Bitcoin matters.

It’s exactly why Bitcoin optimised for censorship resistance, privacy & self-sovereignty, not “fast payments” or “smart contracts” like all the other now-irrelevant crypto’s did.

All of the “potential” that’s promised (amongst the noise) in crypto will be built on top of the most robust network. What remains to be seen is whether that’s Bitcoin, or whether that’s Libra (or both).

A new Money is the real battle-ground.

Not Blockchain.

And in my mind, Bitcoin is the only real alternative to a potentially Orwellian future.

Verdict on Libra?

Big Brother.

Conclusion

Bitcoin is the most under-appreciated innovation in History, but as with all great zero to one innovations, it’s the contrarian aspect that makes it so much more profound.

In 1000yrs, the concept of money will very much still exist — because it’s the foundational element required for any society to function.

Much like the internet, Bitcoin is a public good — owned by the people — and by taking the only two finite resources that we know of (time & energy), Bitcoin is able to give the world a superior monetary network & unit that we can use to better collaborate & function as an open society.

Blockchain is not an alternative, nor does it even matter & nor will it even be spoken about in the coming 5yrs. The real alternative is potentially 1984-stye big brother currencies, whether they’re government issued (eg; China’s social credit system), or issued by non-state consortiums with disproportionate influence in the world (eg; what FB is doing with Libra).

It’s the opt out of those that gives Bitcoin the brightest future of all.

Verdict on Bitcoin?

Brilliant.

Will Facebook Ever Be Able to Launch Libra?

In recent speculation, Facebook has acknowledged that there are several regulatory issues that is preventing the progress of launching Libra globally.

“There can be no assurance that Libra or our associated products and services will be made available in a timely manner” Facebook mentioned in its filing with the Securities and Exchange Commission.

The filing added, “These laws and regulations, as well as any associated inquiries or investigations, may delay or impede the launch of the Libra currency as well as the development of our products and services, increase our operating costs, require significant management time and attention, or otherwise harm our business.”

The spokeswoman told CNBC that “Engaging with regulators, policymakers, and experts is critical to Libra’s success. This was the whole reason that Facebook along with other members of the Libra Association shared our plans early.”

Facebook has been criticized for its history of privacy protection scandal during the Senate hearing. Ohio U.S. Sen. Sherrod Brown commented, “Facebook has demonstrated scandal after scandal that it doesn’t deserve our trust.”

Report: Only 2% of Americans Trust Libra

Facebook Image via Shutterstock

China’s Central Bank Accelerates R&D of its Legal Digital Currency

People’s Bank of China, the Central Bank of China made an announcement of the acceleration of the development of its legal digital currency.

In July, former PBoC governor Zhou Xiaochuan warned that China must take precautions against Libra and must compete against them. The PBoC started to research on digital currencies as Bitcoin became increasingly popular.

Huawei’s CEO Responds to Facebook: “China Can Issue Its Own Libra”

This week, a video conference was held in China regarding the implementations of the important arrangements of the Party Central Committee and State Council on the economic and financial work of the second half of 2019, while reflecting on the first half.

PBoC announced that they are developing their financial technology and developing a digital Yuan due to the growing adoption of cryptocurrencies worldwide, especially after Facebook’s Libra announcement. Walmart recently also came out with its USD-pegged digital currency.

As of Aug 4, the PBoC has filed 74 patents regarding its digital currency according to China’s State Intellectual Property Office.

People’s Bank of China Announces Its Digital Currency is Ready

The Central Bank of China has announced that its digital currency can now be said to be ready. In a major event, the China forum as reported by local news site Shanghai Securities News on August 10, the deputy director of the People’s Bank of China (PBoC) Mu Changchun stated that over five years of rigorous research work has been put into creating a prototype that adopts the Blockchain architecture.

Mu also said that issuing a digital currency using a pure blockchain architecture was going to be a herculean task to achieve considering the fact that China, being a big country has retailers that require high concurrency performance.

China’s Central Bank Accelerates R&D of its Legal Digital Currency The country has decided to implement to use of a two-tier operating system that aims at taking care of the needs of the complex economy of the nation with its vast territory and large population. This system has been said to have the PBoC on the first tier and the commercial banks on the second tier. According to Mu, this system will improve accessibility, bring about better mass adoption rate amongst the general public, as well as encourage innovation amongst commercial bodies.As reported by a news outlet a few days ago, the PBoC has been making efforts to get ahead of the U.S. and Facebook’s Libra by issuing a national cryptocurrency while the American politicians, on the other hand, are trying to take a break on the social networks stablecoin due to regulatory concerns.

Images via Shutterstock

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Gemini's Winklevoss Twins Willing to Dive into Facebook's Libra Project

Winklevoss twins, namely Cameron and Tyler have been a formidable force in the cryptocurrency space as they initiated Gemini, a regulated cryptocurrency exchange. According to CNN, the twins have resolved to settle scores with Mark Zuckerberg, Facebook’s CEO, by partnering in the Libra project.

Cameron Winklevoss has shown his optimism about Libra even if a collaboration does not take effect. He asserts:

“I think there is a day in the future where we can’t live without crypto, or imagine a world before crypto.”

Cameron has also affirmed that Facebook has set a good precedent of being involved with crypto, and soon other corporates will follow. He stipulates that internet giants such as Google, Netflix, and Amazon may be crafting crypto schemes such as indulging in coin projects. Cameron believes that these institutions are watching closely on what transpires in Facebook’s Libra Project so that they can make their next move.

If a partnership is crafted between the two parties, Facebook will be advantaged because the twins are famous for their proactive methodology when it comes to regulation. The twins have also revealed their intention of being incorporated as members of the Libra Association. Therefore, Winklevoss twins believe that Facebook’s Libra is just the initial player as other companies will follow, and this is a positive trend in the crypto sphere.

Image via bostonmagazine

Facebook’s Libra Encouraged to Exclude the Chinese Yuan Being Tied to the Stablecoin

While Facebook is facing regulatory approvals for its Libra project, Facebook told US senators that the initial group of currencies that Libra will be likely backed by the US dollar, Euro, Yen, British Pound, and the Singapore dollar.

Facebook reportedly produced the list regarding the concerns expressed by Virginia Democratic Senator Mark Warner that China may try to push the Libra Association to include the yuan in the stablecoin, Libra. Senator Warner mentioned that China has been encouraging other governments to include its currency in their reserve holdings, and asked Facebook to commit to excluding it from the list of currencies backing Libra.

The Libra Association would be taking all factors into consideration, “Any decision whether to add a new currency to the Libra Reserve would be made based on all the facts and circumstances at the time, including any direct or indirect regulatory restrictions.”

Libra would be backed by a reserve fund consisting of government-issued currencies and debt instruments.

Facebook and the Libra Association have been facing a lot of pushback from lawmakers and regulators regarding their plans to launch their digital currency; concerns have been raised regarding privacy and data security. Facebook also sees an alternate route of launching the digital currency outside of the US regardless of concerns from US regulators.

Image via Shutterstock