Senate Banking Committee Opens Up With New Facebook Libra Statements, What To Expect Next?
The crypto world will certainly be marked by two important aspects in 2019: the end of the bear market (and subsequent bull run) and Facebook’s Libra. Now, the U. S. Senate Banking Committee has recently decided to release the opening statements of the head of Facebook’s Calibra (Libra’s wallet), David Marcus.
He testified on the Senate and talked about the new project, its structure and management, as well as its implications for e-commerce and its consumers. Libra has been criticized a lot inside and out of crypto circles recently, so Marcus definitely had something to prove in his discourse.
Marcus affirmed that one of the hallmarks of the project is its cooperative approach, which can be seen by the fact that Facebook will not be managing the token alone. In fact, it will not be managing it at all. The Libra Association, made by several companies will be doing it instead.
Each member is expected to have an equal opportunity of participating in the key decisions made at the company. Marcus also affirmed that the stablecoin will only be launched after all the questions pertaining to the regulation that involves the token are completely solved.
To him, it is important to see Calibra properly regulated as a money transmitter in order to protect the consumers and to work closely with the government, which will save the company a lot of trouble.
Libra will be a payment tool, not an investment, something that was also clarified at the meeting. It will be a stablecoin, but its price will not be based on a single asset like most of them currently are. The token will be backed by something known as the Libra Reserve.
At the time, it was already revealed that the basket of fiat currency will include the U. S. dollar (USD), Great Britain pound (GBP), Euro (EUR) and the Japanese yen (JPY).
What To Expect Now?
The process of defining whether Facebook’s Libra will be accepted is only just starting. The U. S. lawmakers are now expected to poke at all the possible issues that the company might have in order to discover whether it should be allowed.
For instance, it is widely expected that the regulators will focus a lot on the privacy failures of Facebook so far, something that is considered one of the points in which the company is less trusted.
Data privacy is currently a very important issue to be discussed and, as Libra’s code will be open-source, there are currently some concerns about how Facebook will deal with third-parties creating apps for Libra.
Another issue that might arise is how Switzerland was decided as the home of the Libra Association instead of the U. S. Switzerland is known to protect the assets of the clients a lot more, which can be seen as a shady move by the lawmakers.
Some lawmakers believe that the company might be currently interested in skipping the U. S. legislation by doing this and, therefore, to escape oversight. Other people have claimed that the company might have chosen this route because the crypto legislation is still not very well defined in the country.
As people who are not even Facebook users will be able to use the tokens (via WhatsApp, Instagram or third-party wallets), some issues such as Know Your Customer and Anti-Money Laundering regulations will have to be sorted out before the company is able to move forward.
One problem that could happen is if the U. S. Securities and Exchange Commission (SEC) decides that the new token resembles and exchange-traded fund (ETF). This could harm the launch, as Facebook would need more permissions.
Facebook is currently targeting to launch Libra in 2020, but these hearings will give us some hints whether this strategy will actually work out well or not. If there are too many problems for the company, it is considered more unlikely that the launch will happen before 2021.
The trouble is only unique to the U. S., too. The European Union and India are two important actors that may also determine how the launch will happen. India, in specific, is very likely to ban Facebook’s Libra, which could end up being a huge problem for the company’s future. This is partly the reason why the launch was currently not announced for India (but it still may be).