Facebook’s Libra cryptocurrency payments initiative could be subject to the “highest standards” in global regulation, said Mark Carney, the governor of the Bank of England.
According to a Financial Times report on Tuesday, Carney noted during a central bank meeting in Portugal that he remains “open minded” on the utility of Facebook’s Libra cryptocurrency, admitting that worldwide payments systems are largely unequal at the moment.
However, he stated that it would be inevitable for Facebook to meet the highest standards of regulation should it succeeded in signing up users.
Carney added the U.K. central bank would scrutinize Facebook’s crypto payments plan “very closely” and will collaborate with global forces including G7 countries, the Bank of International Settlements, the International Monetary Fund as well as the Financial Stability Board, for which Carney served as a former chair.
Based on the report, Carney also raised questions on how Facebook would be able to ensure anti-money laundering measures while protecting users’ data privacy.
Carney’s comment came after Facebook revealed its long-anticipated cryptocurrency initiative in an effort to build a global peer-to-peer payments network.
Such move had drawn criticism from both home and abroad for the social media giant. Hours following its announcement on Tuesday, financial regulators in Europe already voiced concerns over the possibility of Facebook’s Libra becoming a shadow bank and asked for closer scrutiny over the project.
A lawmaker that heads the U.S. House of Representatives Financial Services Committee had even askedFacebook to halt the development of Libra for the time being until hearings could be held.
Carney image via Shutterstock
Facebook’s Libra cryptocurrency has captured the imaginations of experienced blockchainers but how can you explain it to people who don’t know much about technology? Thankfully, Facebook posted a few easy-to-follow videos about the Libra ecosystem and even the new Calibra wallet.
First up we see a short demo of the Calibra app running on iOS. The app looks very similar to other apps like PayPal and Venmo and Facebook will also embed its services into WhatsApp and Messenger. The most interesting thing? You won’t need a Facebook account to use Libra.
Next up we have the Libra Ecosystem including a very simple description of blockchain technology. It’s definitely a solid primer on what is actually a complex and difficult problem.
Still too complex? This very basic “Blockchain 101” post describes how Libra – and other blockchain-based – cryptocurrencies work.
Finally we have a brief video about the Libra Association, a non-profit that will manage the cash associated with he project. Think of the Association as a group of non-profits who will tim their do-gooding at various global problems. In short, Facebook is hoping this project not only makes money but helps the unbanked
The head of the U.S. House of Representatives Financial Services Committee wants Facebook to stop developing its new Libra cryptocurrency network – at least temporarily.
Congresswoman Maxine Waters asked Facebook to halt development of the Libra Network until hearings can be held. The move follows a letter written to her by her Republican counterpart, Representative Patrick McHenry.
McHenry wrote, “We know there are many open questions as to the scope and scale of the project and how it will conform to our global financial regulatory framework,” adding:
In a statement, Waters said, “with the announcement that it plans to create a cryptocurrency, Facebook is continuing its unchecked expansion and extending its reach into the lives of its users.”
She added that there is currently no “clear regulatory framework to provide strong protections for investors, consumers and the economy,” when it comes to cryptocurrencies.
“We look forward to responding to lawmakers’ questions as this process moves forward,” a Facebook spokesperson said in a statement.
Growing crowd
Waters and McHenry joined a small, bipartisan group of lawmakers in expressing concern about the Libra project.
Earlier, Senate Banking Committee ranking member Sherrod Brown said on Twitter that Facebook has exploited user data in the past, and cannot be allowed “to run a risky new cryptocurrency out of a Swiss bank account without oversight.” (The Libra currency will be governed by a Swiss foundation.)
The Senate Banking Committee wrote a letter to Facebook last month asking a number of questions about how the project would work and how Facebook would handle user data.
A spokesperson for the company told CoinDesk on Tuesday that the social media giant had yet to respond to the letter, and was working on answers to the questions.
Facebook image via Shutterstock
Edan Yago is the founder of CementDAO, an effort to bring together stablecoins into a unified ecosystem. The views expressed here are his own.
With the announcement of Libra, cryptocurrency has entered the big leagues.
Facebook’s entry into this market means every single company now has to take cryptocurrency seriously. Companies around the world are now considering their cryptocurrency strategy.
This is not a repeat of the corporate circle-jerks of 2015 and 2017. Then, companies played with the idea of having a “blockchain” strategy. Blockchain was a buzzword and companies indulged their innovation departments in building toys that never saw the light of day as actual products. This time could not be more different. Facebook has hammered the final nail in the coffin of “blockchain not bitcoin.”
Facebook has taken blockchain seriously. They understand that “the technology” isn’t cool. What’s cool are the unprecedented products that technology can be used to create: digital cash, new currencies and programmatic money. Every business ever has sought to make money.
Now, one of the biggest businesses in the world, has decided to dispense with the middle steps and go straight to the making money part.
“Why, the crypto pundits have been asking, ‘Do they need a blockchain for this?’” Libra, after all, will be permissioned. They could have “just used a database.”
The answer is simple. Even Facebook could not create this product without the (albeit limited) decentralization that blockchain affords. Facebook needs blockchain for this for the same reason any cryptocurrency needs blockchain. The only central actors that are allowed to issue money are regulated financial institutions. They need to be regulated anywhere that money is issued and used. That is hundreds of different jurisdictions with thousands of different regulations.
Blockchains are protocols that create money and transact money in the form of cryptographic proofs. They are unregulated for the same reason peer-to-peer encryption is unregulated: They are too abstract. The combination of decentralized governance and value that results from solving mathematical problems means that regulators even define laws that would be limited enough in scope to make sense and broad enough to be effective.
They have tried to regulate cryptography and encryption many times and always failed.
Up until now that was a curious fact that polite society had agreed to mostly ignore, sometimes with a derisive chuckle. From now on, it is a fact of business that serious-minded executives need to master.
Master it they will, and Facebook has laid out the playbook:
- Decentralize as much as is necessary, but no more
- Provide a token of stable value so that it can be used reliably in commerce
- Leverage your existing ecosystem to gain users.
Do these things and you a whole world of profiting from seigniorage opens before you. Build loyalty that goes beyond just brand and product to the very means of paying for those products. Collect data previously unheard of, and attribute purchasing behavior to marketing in ways never before possible. Tax every transaction or the interest earned on funds held as reserves. And if you play your cards right, maybe even create money out of thin air.
The big leagues attract the big players. Banks, technology companies, giant retailers, telcos, now have no choice but to enter this game.
The world will not sit idly by and let Facebook own this new, phenomenal market opportunity. A thousand stablecoins are coming. Starbucks will let you buy your venti with “Starbucks.” Verizon and AT&T will issue money as mobile and smart as the device already in your pocket.
Juul will give you discounts if you pay in Jems. The city of Venice will make tourists pay for the burden they have become in, what else, Ducats.
Sure, many of these products will have the same fate as Pets.com. Most products fail. So what? Money is a product now, and if there is one thing every business wants to do, it’s make money.
Bell via Shutterstock
A new cryptocurrency exchange service is available on the border between Colombia and Venezuela, and its aim is to help refugees traveling across the Simon Bolivar International Bridge.
Visitors are now able to use the point-of-sale service with cryptocurrencies to buy goods. The POS is located in Santander, Colombia, just across the border from Venezuela.
Panda Group created the payment alternative with refugees in mind. The group, a Columbian-Venezuela joint venture, announced the implementation of the new service through their Twitter account.
According to the data published by Coinatmradar.com, the service lets users exchange using bitcoin (BTC), bitcoin cash (BCH) and dai (DAI), and converts them into to Colombian Pesos (COP).
At the physical location – a small phone service provider in a mall called La Parada – customers can buy bitcoin with prices based on the Localbitcoins rate in pesos. The service will charge 10 percent above the market price and those who sell their bitcoins will do so for 5 percent more than the established market value.
This is not the first cryptocurrency service in the country. The Panda Group has already installed another five cryptocurrency exchanges in Colombia, most of them in the Colombian capital, Bogotá.
According to Panda CEO, Arley Lozano Jaramillo, their solutions are focused on helping the Venezuelan users and they announced the addition of a new service called Xpay.Cash to encourage adoption.
“This service is for all our brothers to pay directly in Cucuta with their cryptoassets and mitigate the loss of exchanging from BTC to COP, which represents a loss of at least 20%,” Jaramillo said.
Colombia has the highest rate of cryptocurrency investors in South America, next to Brazil. There are reportedly over 20 businesses accepting bitcoin payments in the country. The establishments are mainly focused in tourism, food and digital services.
Bitcoin at the Border
The ATM installed in Villa del Rosario City is connected to the Venezuelan border by the state of Tachira. The states are only separated by the Simon Bolivar International Bridge, one of the most heavily traveled borders used by Venezuelan refugees.
The refugee situation has also sparked a focus on the cryptocurrency, mainly for humanitarian aid purposes.
On the other hand, the last point of sale with cryptocurrency was implemented in Cúcuta, another border location with a growing Venezuelan population. The state also has a Bitcoin ATM, one of 42 in the country.
Map image via Shutterstock
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