Libra Amplifies Discussion among Regulators Concerning Cryptocurrency IssueJuly 6, 2019
While Libra is considered to be a cryptocurrency, it is a stable coin. The only thing common between Libra and cryptocurrency is that both of them function on a blockchain.
“A basket of bank deposits and short-term government securities” back the stable coins. It is more like an ETF than a stable coin, which is backed by fiat.
Elizabeth Baird, SEC Deputy Director was asked about stable coins and she gave a blunt reply stating, “I think they’re securities.”
Valerie Szczepanik, SEC’s head of digital assets stated, that the stable coins “does not have an expectation of profits.” He further felt that it does not matter.
Libra investment token is different from Libra Coin, and it is hoped that the Facebook will become the de facto payment mechanism for the whole of the world.
The white paper states, “Libra’s mission is to enable a simple global currency and financial infrastructure that empowers billions of people.” Glossing over the unrealistically aspirational qualification of “simple” (really??), can we use a security as a “currency”?
It is the desire of even the most law abiding citizen to keep away from taxes. Using securities as a payment mechanism will come up with lot of potential use cases. When it comes to using securities as a payment this might not be an issue for the institutions because they will have back offices who are competent in handling them.
Despite the faults and features, Libra is a step forward in financial innovation. The entrepreneurial world has been waiting for solutions, which will push the conversation of systems that reduce payment friction forward. While this is not he complete solution that they have been looking for; however, this solution is moving the process the next phase.
Most of the inventions are not being used for their original intentions. This might also be the case with Libra. This innovation will sure improve the adoption and awareness of the development of cryptocurrencies as small as TCAT tokens in a broad manner. Though it might be a lot different than what the designers originally anticipated.
Cryptocurrency is coming across greatest levels of institutional growth. “Exchanges are changing their focus from retail traders to institutional traders, providing such customers better ability to customize the front end of their trading platforms and providing APIs that better suit what institutional traders are used to.”
So, all of these have amplified the discussion among regulators concerning the “cryptocurrency issue.”