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Facebook's Libra

Singapore’s Temasek Joins Facebook’s Libra Cryptocurrency Project

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Singapore’s Temasek, which is among the largest institutional investment firms globally, has thrown its weight behind the under fire Facebook’s Libra cryptocurrency project.  The state-backed investment firm is the latest organization to join the Libra Association.

After losing key partners due to regulatory concerns over Libra, the Libra Association announced the addition of Temasek and two more new members on May 14. The other inclusions are digital currency investment firm Paradigm and private equity firm Slow Ventures. 

Singapore’s Temasek becomes first Libra Association member from Asia

Besides being the first state-backed company to join, Thursday’s inclusion of Temasek to the Libra Association made the investment firm the first Asia-based member. Singapore is widely acknowledged as the financial technology hub of Asia. In addition, the country’s administration is very supportive of cryptocurrency related technology, and financial technology innovations.

Facebook revealed its Libra cryptocurrency project back in 2019; as an international digital payments platform that will be backed by multiple fiat currencies. Nevertheless, Facebook’s cryptocurrency idea was heavily scrutinized by regulators globally, who were worried the cryptocurrency would disrupt the financial system; giving a firm with privacy scandals total control over people’s resources. 

Temasek among Libra Association’s key members

Following the scrutiny by the U.S government and various other governments, a number of high profile companies have pulled out from the project.Global firms such as MasterCard, Visa, Vodafone, PayPal and others have abandoned the Libra cryptocurrency project. As a result, Singapore’s Temasek is now one of the most significant members of the Libra Association; with a portfolio value of about $219 billion.

“Our participation in the Libra Association as a member will allow us; to contribute towards a regulated global network for cost effective retail payments,” Chia Song Hwee; the deputy CEO at Temasek, highlighted in a statement. “Many developments in the space excite us – we look forward to further exploring the potential of the technology.”

 

Facebook Libra on Hold, New Competitor Cello Alliance with Similar Goals

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House Democrats have given an official notice to Facebook to hold up its Libra development. A move that blown Facebook’s hopes of launching the project this May. A clasp on the Calibra the digital wallet of the libra was also indicated in the Directive.  In the meantime, Congress asked the Libra Hiatus to analyze the potential risks of the cryptocurrency and its implications after the roll-out.

Meanwhile, during the project launch, the Chairwoman of the Financial Services Committee gave a prior hint on such an action. Maxine Waters (D-CA) sent an open letter to Facebook CEO Mark Zuckerberg, Sheryl Sandberg, Chief Operating Officer, and David Marcus, President of the Libra.

Also note that it’s not just the House Democrats who sent a letter to Libra. But even Senate Banking Chair Mike Crapo set up a July 16 hearing with Marcus on the project’s vulnerability and data privacy risk. Waters ‘ committee is also expected to hold a hearing on the same on the next day.

Nevertheless, a spokesperson for Libra told reporters that they looked forward to sitting down with lawmakers. The spokesman insisted that they are willing to answer any queries from the House Financial Services Committee, as ever.

In fact, Facebook doesn’t seem to be shocked by the regulatory scrutiny barrel; as they realize that Facebook is in the hands of at least half of the world’s population. The spokesperson for Facebook said it was also imperative that Facebook cease with its implementation plans immediately. A delay that will take as long as Congress and regulators find an opportunity to evaluate the risks of the projects and take the necessary actions.

The news came just a few days after Libra had promised to rethink its plans for the Libra. On March 4, Facebook announced its consideration of reviewing the Libra system and providing digital versions of existing proven currencies. Leading and globalized currencies like the Euro and the Dollar. The report noted that the association would continue its project and also promised to launch the digital wallet of social media by the autumn of 2020.

Libra Head of Policy and Communications Dante Disparte, however, said that they had not changed the association’s goal of building a compliant global payment platform. None of them has changed the basic design principles of the project, which support the goal. Following the bloodshed of some of its partners, such as Mastercard and Visa, Libra is currently in partnership with Shopify, Spotify, and Lyft, among others.

Silicon Valley Startup CLabs is currently working to build a payment platform similar to Libra. With similar goals and a partnership with some of Libra’s members.  However, alongside dozens of partners, the company is launching a blockchain for commerce affiliation. The partners include Coinbase Ventures, Bison Trails, Andreessen Horowitz and Anchorage.

  Rene Reinsberg, the C Labs Founder said:

“The Alliance will use blockchain experience to reimagine the future of money and create inclusive financial devices,” 

The blockchain will remain on cross-border transfers of money and donations to humanitarian groups, as well as attempting to ascertain the money doesn’t go through middlemen.

 

Bank of International Settlements to Approach G20 Members to Back New Cryptocurrency Roadmap

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The cryptocurrency market has always been the subject of speculation and the concept of trust has been very difficult to establish. This has forced many institutions within the space to work together and come up with solutions.

According to recent reports, the Bank of International Settlements [ BIS ] is planning to submit a Cryptocurrency Roadmap to the G20 to lower cross-border transaction costs.

During the weekend this decision was announced with the bank saying it was high time institutions took a proper look at the crypto industry. Today, cross-border payment systems are operating in a slow and cumbersome manner and companies like Ripple were planning to change that.

This is the first time that such a large group of world leaders will be subject to developments in the cryptocurrency space and how to deal with them.

The Bank of International Settlements has urged members of the G20 to get behind its plan to reduce growing transaction costs in a faltering economy. High costs, low speeds, and cumbersome processes have been some of the biggest enemies of the current cross-border transaction system.

According to the bank, several regulators, central banks and treasury officials had put their heads together to come up with a solid plan.

Agustin Carstens, the General Manager of BIS had said:

“Central banks have a core role in payment systems. The changes underway require them to step up and play a more significant part in improving the safety and efficiency of these systems. Money and payment systems are founded on trust in the currency – whether cash or digital – and this trust is something that only the central bank can ensure.”

The body recognized that cross border payments were important for growing economies and the issue was of utmost importance. The roadmap will look into current costs, risks involved in crypto and the ways in which the public and private sectors could be involved.

The BIS acts as an umbrella group for a large group of banks and the jump into crypto meant that more and more players were getting interested in the field of digital assets.

For the first time, the BIS dedicated all of its time for a quarterly review to discuss the issuance of Facebook’s Libra. The Basel based organisation pointed out that central banks need to up their game in the financial landscape wit blockchain/crypto acting as the perfect tool. BIS also wants to remove the middle men from the process and establish a cheaper seamless network.

For the first time, the BIS has dedicated all of its time to a quarterly review to discuss Facebook’s Libra issuance. The organization based in Basel found out that central banks need to play their game in the financial environment as the ideal resource is blockchain/crypto. BIS also wants to take the middle men off the chain and set up a cheaper streamlined network.

The umbrella bank has not yet revealed what it plans to do with crypto regulations but that is probably a discussion for another day. Central banks have no hold over cryptocurrencies like Bitcoin and that is the reason why some countries were planning to release state-owned CBDC‘s.

These Central Bank Digital Currencies [CBDC] are expected to possess the best of both worlds: regulatory overwatch as well as all the features of a cryptocurrency.

 

G20 Urges Countries to Implement Cryptocurrency Policies Set by FATF

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The G20 Finance Ministers and Bank Governors held their first meeting this year in Riyadh, Saudi Arabia, on 22 and 23 February. They discussed a number of financial issues, but cryptocurrencies and stablecoins were among the notable ones. In addition, the G20 issued a statement in support of the implementation of the cryptocurrency policies established by the Financial Action Task Force (FATF).

The Libra Association is preparing to launch the Libra stablecoins soon, and some European and United States agencies wondering what to do next. According to FATF, as government agencies across the world work to understand digital currencies, laws and regulations pertinent to stablecoins are not being implemented fast enough. A communique published on Feb. 23 read: 

“Building on the 2019 Leaders’ Declaration, we urge countries to implement the recently adopted Financial Action Task Force (FATF) standards on virtual assets and related providers.”

Going forward, finance ministers and central bank officials; reiterated their support for the FATF as the AML and CFT standard-setting body. While stressing the previous agreements, they highlighted the role of the FATF in helping to combat and prevent money laundering, terrorist financing and proliferation financing.

In fact, the G20 held a meeting in Osaka Japan back in June 2019. Back then, the members agreed to follow and implement the standards set by the FATF in relation to crypto-assets and other related services. The AML Supervisory Agency began tracking how countries enforced the policies in October last year.

‘Global Stablecoins’ to be Evaluated Appropriately before Launch

Moreover, through a letter drafted to G20 finance ministers and central bank governors, the Financial Stability Board (FSB) chairman, Randal Quarles, raised concerns on the way crypto is affecting the global economy. Randal’s biggest concern was that regulatory bodies are toiling to match that pace. He wrote:

“FSB members recognize the speed of innovation in the area of digital payments, including so-called ‘stablecoins’. We are resolved to quicken the pace of developing the necessary regulatory and supervisory responses to these new instruments.”

In addition, the finance ministers and central bank officials discussed stablecoins during the meeting. The G20 expects to receive more stablecoins and virtual assets reports from global standard-setting bodies such as the International Monetary Fund (IMF), the FATF and the FSB.According to the G20, those stablecoins with the ability to gain at scale after launch, are global stablecoins. These include Facebook’s Libra stablecoin and the Chinese digital yuan. The communique reads:

“We reiterate our statement in October 2019 regarding the so-called ‘global stablecoins’ and other similar arrangements that such risks need to be evaluated and appropriately addressed before they commence operation, and support the FSB’s efforts to develop regulatory recommendations with respect to these arrangements.”

Recently, at a hearing before the House of Representatives Financial Services Committee, with Jerome Paul in attendance; the Chinese government has been mentioned as an entity with the potential to grow on a scale. This ended with a request from Jerome Paul to start working on the digital dollar to counter the threat posed by China.

Regulatory Response to Crypto Across the Globe

In conclusion, the FSB is weighing on holding a public consultation in April; on regulations to weigh the risks and benefits  of stablecoins. As agencies are forcing exchanges in Brazil to close shops due to fines; other exchanges continue to operate in Europe without proper licencing and oversight. The FSB which consists of regulators, bankers and government officials from the G-20 nations; was formed back in 2009.

Facebook’s Libra Project is Developing a Governance Model that will Disrupt the Remittance Space

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The controversial Facebook’s Libra project has been 2019’s biggest story. However, it is not the only payments project hoping to transform the payments sector, when still ripe to throw into disarray.

As per the most recent statistics, the remittance course leading to low and middle-income nations is predicted to extend to  $574 billion in 2020; and $597 billion by 2021. However, this is a sector that has been pestered by carelessness, which has been an expensive occurrence to some. The high cost on top of the rigorous laws and regulations, continue to bear an impediment to the payments sector.

Dante Disparte, the Head of Policy and Communications at the Libra Association, likens the current payments system as “walled gardens.” He notes that the current 230 million economic asylum seekers are the individuals that propel the GDP of their mother countries. This is bigger than the p2p payments, foreign direct investments or even official government aid and development assistance. However, he adds that there is no way to achieve this in a less expensive and systematic way.

Libra Tapping Payments Space

Moreover, Disparte claimed in a recent interview that the competition in the payments space is minimal; and the existing methods are “one big monopolist player or there’s a duopoly operator” running the remittance sector. He also touched on the Libra project exploring this opportunity. He said:

“If we introduce the opportunity for digital wallet providers to emerge that are interoperable, that’s a big game-changer for the world. To do that right, of course, means you have to go through the process we’re going through now – build a governance model that can withstand the the the vagaries and the vicissitudes of any one organizations and association but also build a model that could achieve a regulatory standard that protects consumers.”

In addition, the lack of infrastructure has led to slow digital currency and remittance engagement. However, in the case that Facebook’s Libra project receives regulatory approval, it will go head-to-head with an experienced figurehead in the industry; Ripple. The blockchain firm has multi-partnerships under its wing.

Will Libra Disrupt the Remittance Space?

As per the initial expectations, Facebook expects the Libra cryptocurrency to launch within the first half of 2020. The global stablecoin is designed to enable users to be able to initiate payments using Facebook and WhatsApp and stored in its digital wallet called Calibra. 

The main focus of the Libra project is on developing countries and the unbanked. However, it remains to be seen which companies the project will partner within these regions because their targets are not expected to book Uber or buy hamburgers. The ineptitude to bring value is expected to make make it hard to sell in the particular regions especially; since it will disrupt the local players on top of limiting the government’s oversight on the banking system.

In addition to this, Libra will facilitate payments regardless of whether the parties involved are criminals or not; whether they are under sanctions or not. Facebook will have to provide good proof that it will not facilitate terrorism. Given how the social media giants handle their social network, this will be a difficult task.

In conclusion, the stablecoin will have to get rid of many middlemen (in this case banks) from the market. However, they still need banks in their loop. In order for Libra users to use it, they will have to convert fiat into Libra. Additionally, if its target is the over $500-billion-dollar remittances market, there is a need for a smooth transition from Libra back to local currency. These are the areas where banks will be required.

 

Why is Japan Exploring the Development of a Central Bank Digital Currency?

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A report by Reuters Japan suggests that the Asian country is on the verge of joining the growing list of countries across the globe that are planning to issue a state-backed digital currency. 

 Japanese Vice Minister for foreign affairs, Norihiro Nakayama told Reuters that the legislators are exploring on issuing the Central Bank Digital Currency (CBDC) in the form of a digital Yen. Apparently, this move will be a joint venture between several private entities and the Japanese Government. The lawmakers are aiming to keep Japan at least one step forward in the cryptocurrency industry.

 Moreover, the lawmakers may forward the CBDC’s proposal as early as next month, according to Nakayama. This begs the question, why is Japan so eager to enter the CBDC race? After all my research, I can only think of two major answers: Pressure from China and to counter the threat posed by Facebook’s Libra cryptocurrency.

 China’s Push for a Digital Yuan

China is another Asian country that has been exploring a state-backed digital currency since 2014. The digital Yuan is already under development at the People’s Bank of China (PBoC). This move has got a lot of countries worried, Japan included. However, most details about its development have not been revealed to date.

 “China is moving toward issuing digital yuan, so we’d like to propose measures to counter such attempts,” Nakayama claimed on Thursday.

 Japan’s major worry is that China is developing digital Yuan as a legal tender. Japan basically employs the dollar to transact. As per the country’s finance minister, China’s CBDC would be a “very serious problem” due to the fact that most Japanese prefer Cash.

 Additionally, there is a spreading concern that China might use its CBDC as a financial surveillance tool; to monitor the user’s spending habits. However, the head of PBoC’s digital currency research institute, Mu Changchun made an effort to calm the unrest. He said the upcoming digital Yuan is not an attempt to spy on users and people will be able to carry out private transactions.

 China has accelerated in developing its digital currency lately. In fact, it is the launch of Facebook’s Libra project that has hastened China’s work on its state-backed cryptocurrency. This is as per PBoC’s Director Wang Xin.

 The Danger Posed by Facebook’s Libra Cryptocurrency

Major countries have presented a lot of obstacles towards the launch of Facebook’s Libra project since it was announced back in June 2019. Despite the challenges, Libra keeps pressing on. The Libra Association formed a new ‘Technical Steering Committee’ which will consist of five initial members. The committee will superintend the development of the project.

 In an interview with NPR, Chuanwei Zou of Bitmain explained that Facebook’s Libra cryptocurrency “represents a huge threat” to the prosperity of mobile payments. Chinese platforms such as WeChat and Alipay faces a huge challenge from Libra.

 However, Japan has different worries regarding the launch of Libra cryptocurrency. A report back in July hinted that Japanese legislators were concerned that Libra would be hard to manage. According to the lawmakers, the stablecoin is backed by a basket of different fiat currencies. Hence, it cannot be pegged to a single country’s politics.

Conclusion

In the near future, Japan, China, and all other concerned states may not have to worry about Facebook’s Libra. Major members of the Libra Association have left the project with telecom company Vodafone being the latest to abandon them. The project may be weakening.

 

 

Vodafone Becomes Next Major Player To Quit Facebook’s Libra; States Focus on ‘M-Pesa’ as Reason

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Regulatory authorities have always determined the fate of several cryptocurrency companies and as time passes the rules have become more and more stringent.  When Facebook decided to launch its own cryptocurrency last year, it did so with a lot of backers in its kitty. But looks like things are changing now.

According to recent reports, Facebook’s Libra has lost yet another partner in between a maelstrom of regulatory uncertainty. This comes after months of open-ended discussions about the much talked about cryptocurrency.

On January 22nd, Vodafone announced that it was pulling out of the Libra project. After this, the British telecommunication giant becomes one of the names joining Paypal and Mastercard as they leave the Libra family. An official statement from the company said:

“Vodafone Group has decided to withdraw from the Libra Association. We have said from the outset that Vodafone’s desire is to make a genuine contribution to extending financial inclusion.We remain fully committed to that goal and feel we can make the most contribution by focusing our efforts on [mobile payments platform] M-Pesa.”

M-Pesa is a money platform for smartphones with a massive presence in developing countries such as Kenya. Vodafone has stated that it wants to elevate M-Pesa’s 30 million users across 10 countries.

Once Vodafone’s exodus was announced, Libra took measures to show that there were no problems within its doors. To put out the growing fires, Dante Disparte, the head of policy and communications for the Libra association gave his two cents on the future of Facebook’s cryptocurrency.

Disparte claimed that the organization would continue to stick to its core values and deliver products. He candidly admitted that the makeup of the Association members may change over time but that was “only natural”.

Vodafone has joined payments giants such as Mastercard and Visa as companies that backed out of the Libra project. The debit and credit card giants had decided to leave back in October 2019, mainly pointing at the giant cloud of regulatory uncertainty. Both the companies had quit the roster a  few days before Facebook CEO Mark Zuckerberg appeared before the House Committee on Financial Services.

Several regulators have raised multiple concerns over Libra and that has been the major obstacle impeding its launch. Libra was supposed to launch in early 2020 but looking at the problems within its system, it looks like it will be more delayed. Libra had also lost Mercado Pago, a Latin American payments company towards the fag end of 2019.

Although Visa and Mastercard pulled out, a spokesperson from the former stated that there were other options in the works. According to him, Visa was appreciative of what Facebook was doing and remain open to working with Libra at a much later stage.