Will Regulators Apply Stricter Rules on Bitcoin Upon Investigating Facebook’s Libra Stablecoin?
In a tweet made out on Thursday, July 18, 2019, blockchain and crypto attorney, Stephan D Palley shared his viewpoint on Facebook’s Libra. Said activity isn’t the first of its kind, as many world leaders, countries and business tycoons have been assessing Libra’s pros and cons.
Palley tweeted his interest in understanding the cryptocurrency backed by 28 different organizations with respect to the AML compliance and its potential impact on the crypto sphere.
A smart friend who must be anonymous for biz reasons asked me to post these thoughts on key issues w/ Libra from an AML compliance perspective & impact on entire crypto industry.
It's thought provoking stuff & I agreed to repost, slightly edited for style.
Thread follows 👇
— Palley (@stephendpalley) July 18, 2019
In the initial argument, Palley speaks heavily on regulators’ interests. In particular, this involves the latter’s preference for VASPs as opposed to “permissioned services on top of permissionless networks.”
This being said, he trusts that regulators will also not like BTC being sent to a non-KYCed wallet, which implies that scrutiny will be on the rise. Given that Libra is deemed a permissionless network, he said that this is:
“Only with regard to who can operate a validator node, and who is permitted to purchase Libra directly from the [Libra] Association.”
Despite regulators distaste for permissionless networks, Palley argues that it is what normally happens after a wallet has been created (with the same currently applied to the likes of Bitcoin and Ethereum).
As per the claims made, the Association is seeking to register as an MSB and will not launch until said compliance is accepted by regulators. Palley trusts that at some point in time, the Association will be faced with pressure to rid the creation of permissionless wallets, and if they fail in their endeavors, this could mean bad news for the likes of Bitcoin and Ethereum. Why? Due to “AML double-standards”.
Simply put, Palley argues that if Libra cannot promote the creation of permissionless wallets, then the likes of Bitcoin and Ethereum will also be negatively impacted by stricter regulations. With stricter regulations comes a setback in mainstream adoption as cryptos will less likely be viewed as, “Stores of value or medium of exchange at any kind of scale.”