Less than a day after the much-awaited Libra launch, we are already seeing regulators expressing their reservations about having a global, blockchain-powered, borderless currency for payments, powered by a Valley behemoth. Libra may not be a security under SEC’s lodestone Howey test; there is not a reasonable case of future profit expectations as its value is expected to be relatively stable. However, the presence of a new form of currency that is not controlled or issued by a central bank will be of concern to many governments across the world. Unlike in the case of bitcoin, which is an existential threat theoretically to central banks but is still not quite a mainstream phenomenon in terms of adoption, Libra has the heft of Facebook and the user base that Facebook and the Libra Association members bring to the fore.
Given this context, regulators are not sitting still. For instance, with the increasingly likely ban on cryptocurrencies by the Indian government, Facebook’s Libra project will suffer a setback as it will not be able to allow its 200 million WhatsApp users in India to use Libra for p2p payments. Moreover, with Libra expected to make remittances cheaper by significantly reducing the transaction costs, the benefits of cheaper crypto-powered remittances will not be available to the recipients in the world’s biggest remittance corridor. With around 10-12 months to go before the actual launch of Libra, it will be interesting to see whether Facebook can convince regulators around the world to come on-board as well, for the project to be successful on a global scale. It is not going to be easy, but we believe that they will to a large extent be able to do so, especially with the network of partners they have on-boarded on the Libra platform.
You can catch up on our previous editions on Libra here
Perhaps also as a result of fears around increased scrutiny in a post-Libra environment, privacy coins make up 3 of the top 5 week-on-week top gainers. Grin ( which we covered at length earlier
) is up 40%! Zcash and Monero, the two secrecy coin majors are also in the top 5.