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Libra in DC

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Satoshi&Co Daily Crypto Newsletter

July 18 · Issue #212 · View online
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Libra’s congressional hearing, led by Facebook’s crypto chief David Marcus, provided some valuable insights; It brought to the fore the high degree of skepticism that regulators have over Facebook’s crypto plans, especially given its track record with handling data; as well as its alleged role in circulating fake news during the 2016 presidential election. Although we were fairly skeptical going into this one, it does seem like the senators were far more prepared this time around, as opposed to the last Facebook hearing with Mark Zuckerberg in the hot seat. 
It did end up becoming a bit of Bitcoin v Libra. Although this is reductive, zero-sum framing, this also indicated a surprisingly deeper appreciation of the differences between Bitcoin and Libra than one would have expected; As was foretold, Libra’s attempt at a private, or at least a semi-private oligopolistic blockchain, is definitely making bitcoin look good. The senators were unanimously leaning towards trusting the decentralized collective that powers bitcoin; as opposed to letting the fate of the crypto universe depend upon a company that has perfected the art of converting user data into a relentless, sleek, money-printing machine. 
The tone of the senators that questioned David Marcus on a wide range of topics seems to indicate that the federal government is extremely skeptical on how Libra would reach its stated goal of banking the unbanked without the risk of violating extant regulations. Some of key talking points and responses from David Marcus from the hearing are as follows:

  1. The U.S. should “absolutely” lead the world in rule-making for cryptocurrencies
  2. The Libra Association chose to be headquartered in Switzerland “not to evade any responsibilities of oversight” but since that is where international financial groups like the Bank for International Settlements have their offices. Calibra itself will be regulated by the U.S. Department of Treasury’s Financial Crimes Enforcement Network
  3. Libra will comply with all U.S. regulations and not launch until the U.S. lawmakers’ concerns have been answered
  4. “You will not have to trust Facebook” because it’s only one of the 28 current members of the Libra association. Eventually the plan is to extend to membership to over 100 Libra Association members. Facebook will not have special privileges, and no member can control more than 1% of voting. In case you have not already done so, check out some of Libra coverage here and here
  5. David Marcus would accept compensation from Facebook in the form of Libra as a show of trust in the currency
  6. It is “not the intention at all” for Calibra to sell or directly monetize user data directly, though if it were to ever offer additional financial services in partnership with other financial organizations it would ask consent to use their data specifically for those purposes
  7. Facebook’s core revenue model around Libra is that more online commerce will lead businesses to spend more on Facebook ads
  8. When repeatedly asked why Facebook is pushing Libra to happen, Marcus noted that blockchain technology is inevitable and if the U.S. doesn’t lead in building and regulating it, the tech will come from places “out of reach of our national security apparatus,” raising the spectre of China, Russia and other traditional adversaries
In the final analysis, this is not a battle between Libra and Bitcoin, as much as that was how this came to be framed during the hearing. Libra opens up another class of cryptocurrencies, one we should ideally call ‘Network Coins’. We have been doing some thinking around this emerging category, which is well worth checking out. We even had a tweet storm on this earlier today 
Ramani ‘Ram’ Ramachandran
*Facebook’s Libra launch changes the game for cryptocurrencies, much as Facebook itself heralded the transition to Web 2.0, a generation ago. It marks the birth of a new type of coin, something that should aptly be termed a ‘network Coin’, to differentiate it from crypto
Meanwhile in Crypto Wonderland....
“G7 Calls For Stringent Regulations On Libra”
Digital currencies such as Facebook’s planned Libra raise serious concerns and must be regulated as tightly as possible to ensure they do not upset the world’s financial system, Group of Seven finance ministers and central bankers said on Thursday. Finance Minister Bruno Le Maire of France, which holds the rotating presidency of the G7 top world economies, told a news conference the group opposed the idea that companies could have the same privilege as nations in creating means of payment - but without the control and obligations that go with it.
“Coinbase To Launch Data Tools For Crypto Newbies”
Coinbase is rolling out new tools to help entry-level crypto users understand what seasoned traders are up to. The exchange announced Wednesday the availability of a new suite of signaling tools. One such tool broadcasts the activity of Coinbase’s top traders. “The top holder activity signal is the percentage of Coinbase customers with large balances of an asset (top 10%) who have net increased (bought) or decreased (sold) their positions in that asset through trading over the last 24 hours,” an official Coinbase blog post explained. “This is updated approximately every 2 hours.”
“Japan To Launch A Crypto-based SWIFT Alternative”
The Japanese government is attempting to spearhead the creation of a new, global cryptocurrency payments network that would be similar to SWIFT. Citing an anonymous source, a Reuters report published on July 18 claimed that the country’s push for the network is motivated by a resolve to combat money laundering more effectively. While plans are being kept firmly under wraps, the source alleged that Tokyo hopes to have the network established within the next few years. Plans for the network were reportedly initially proposed by Japan’s Ministry of Finance and its national regulator, the Financial Services Agency (FSA).
“French Regulator To Approve The First Regulated ICOs”
Autorité des Marchés Financiers (AMF), France’s financial watchdog, will approve the first group of cryptocurrency firms under a new set of digital currency regulations to be adopted later in July 2019. In order to gain approval from the regulator, crypto firms must act in accordance with capital requirements and consumer protection standards, as well as pay taxes in France. The new rules are some of the first of their kind to be instigated by a major economy.
Tweet of the Day
Dan Hedl
Dan Hedl @danheld
“Bitcoin isn’t innovating”

- Segwit
- Schnorr
- Lightning
- Taproot/Graftroot
- Sidechains
- Liquid
- Drivechain

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