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John Kiff

Facebook's crypto plans look a lot like the ones the SEC is trying to stop - 0 views

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    The Libra investment tokens will give founding members the right to a portion of funds from a future reserve as well as incentives in Libra coin. The Libra Association is clear that it intends for the Libra coin sold to users on its blockchain to be a currency. However, the intermingling of the Libra coin as incentives for the founding members may be viewed by the SEC as integrating the offerings of the Libra investment tokens and the Libra coin, making the Libra coin a security as well from the SEC's viewpoint.
John Kiff

Facebook to launch Libra Blockchain testnet next week, backed by Libra Reserve - 0 views

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    Facebook and dozens of partners are set to unveil the Libra Association and Libra Blockchain next week. The Libra Blockchain will be backed by Libra Reserve, a reserve of real assets that will provide the cryptocurrency with "stability, low inflation, global acceptance, and fungibility. The Libra Blockchain will be open-sourced under an Apache 2.0 License as of the day of the announcement, and a testnet will be launched at the same time.
John Kiff

Libra and Financial Inclusion - 0 views

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    "What the Libra discussion totally misses is how consumers are going to get value into the Libra system in the first place.  If I have cash, how do I put funds on Libra?  I'm going to need to go through a bank or other financial institution, and it's not going to be free.  Same if I want to take money out of Libra."
John Kiff

MIT Fellow Says Facebook 'Lifted' His Ideas for Libra Cryptocurrency - 0 views

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    MIT's Alex Lipton says there is a key design problem with Libra in that it would be issued in a non-immunized fashion against financial paper. Libra will need to buy high-grade paper to back the coin, so the owner of the paper will receive money from Libra (which it collected from consumers in return for Libra) and this money will start to circulate in the system. As such, there would be twice as much money in the system, with all the negative consequences.
John Kiff

Facebook to Back Libra with Major Fiats, Might Exclude Chinese Yuan - 0 views

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    Facebook and it's Libra Association partners are planning to initially back Libra with fiats including US dollars, euro, yen, British pound, and Singapore dollar, on concerns raised by Senator Mark Warner (D-Virginia) for China's attempts to push the Libra Association to include yuan in the basket of the currencies backing Libra.
John Kiff

Former U.S. CFTC Timothy Massad weighs in on Facebook's Libra 2.0. - 0 views

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    Former U.S. CFTC Timothy Massad finds that Libra's 2nd white paper deals with many of the concerns previously raised. While Libra may not succeed in improving access to financial services for the underserved, he believes we should let it try. That is, we should create a reasonable regulatory framework under which the Libra proposal can be developed and implemented. The competition in payments will be a good thing, but regulators around the world need to work together to construct the proper framework for Libra. The financial regulatory challenge in the United States would be best addressed if Congress created a comprehensive framework for the regulation of payment systems, but that seems unlikely to happen in the short term. He belives that for many the potential benefits Libra might bring to our payment options outweigh the risks associated with an increase in Facebook's power and its collection of data.
John Kiff

Will Libra Displace National Currencies? - 0 views

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    If you buy most things online, and if everything online is priced in Libras, then you'll end up living your life denominated in Libras, and only converting your Libras into dollars on your occasional touristic visits to the physical world. The goal is for Libra to be more useful than any national currency, accepted in more places and with fewer complications; pegging it to a single national currency would only hold it back.
John Kiff

Libra's Unresolved Puzzles - 0 views

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    Exactly what kind of money will Libra be? The white papers under-specify the core mechanism that is supposed to control the value and quantity of Libra. Is the Libra Reserve really like a currency board? Or is Libra meant to be like a mutual funds share, redeemable (by authorized resellers, not by the public directly) at the net asset value of a low-risk mutual fund diversified across several fiat currencies?
John Kiff

Libra's Unresolved Puzzles - 0 views

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    My best guess is that Libra is meant to be like a mutual funds share, redeemable (by authorized resellers, not by the public directly) at the net asset value of a low-risk mutual fund diversified across several fiat currencies. The public can buy and sell Libra "coins" in exchange for existing fiat money. Also, unlike an ordinary mutual fund, which allows members of the public to buy shares directly and sell them directly back to the fund at their current net asset value, Libra only allows Resellers to interact directly with the Libra Reserve.
John Kiff

At House hearing, Facebook's Libra stablecoin faces existential threat - 0 views

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    "[I]t seems that we have integrated the [Libra investment] token into the Libra coin in some way such as to produce a return, which would then deem it [the Libra coin] to be a security." (U.S. Rep. Al Green at a September 24 SEC oversight hearing)
John Kiff

How Anti-Money-Laundering Rules Hinder Libra's Mission to Reach the Unbanked - 0 views

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    The Libra Association is thinking of radical approaches to reach the unbanked in certain locations, including a "step-ladder" approach to KYC regulations. The FATF said it is open to working with Libra about potentially building new forms of digital identity. Libra believes blockchain forensics firms like Chainalysis, Elliptic and Coinfirm will help strengthen the case for "tiered KYC" by monitoring wallet profiles and transaction histories. Non-profits in the Libra Association like the Kiva Foundation may play a key role.
John Kiff

There's a Second Token: A Breakdown of Facebook's Crypto Economy - 0 views

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    In addition to Libra, the project will also issue a "Libra investment token" that will be sold only to the founding corporate members of the Libra Association, and accredited investors. Excess interest earned on the portfolio backing outstanding Libra collateral will go to holders of the investment tokens.
John Kiff

What exactly is Facebook's Libra Reserve? - 0 views

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    Some are comparing Facebook's Libra Reserve scheme to the IMF's Special Drawing Right (SDR) system. This makes sense. It's based on a basket of currencies just like Libra intends to be when it is launched next year. But the truth is Libra is anything but an SDR system.
John Kiff

Facebook's Libra probably won't help people without bank accounts - 0 views

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    The unbanked do not have bank account numbers and they may not have credit cards, either. They have cash. There's nothing in the Libra white paper about how Libra will lower fees to convert fiat cash into Libra, which is both the essential challenge of consumer banking and an explicit part of Libra's problem statement.
John Kiff

Facebook's Libra Is a License to Print Money - 0 views

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    The reserve isn't quite as great as it seems, though. Like a money-market fund Libra has no capital and no deposit insurance, so any drop in the value of the reserves should mean the value of Libra falls. Losses from fraud, mismanagement or default within the reserve fall on Libra holders, unlike with a normal bank account or bank note.
John Kiff

A Monetary Review of Project Libra - Part 1: The Libra Reserve - 0 views

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    This article seems to sppeculate that the Libra Association will effectively run open market FX operations to maintain the stability of the Libra against the currency basket. Although the article doesn't mention it, I guess it's implicit that the huge cash balances of Facebook ($50B+) and other Association members are in effect FX reserves for these purposes.
John Kiff

Libra vs. the Other Guys - 0 views

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    Libra is put in perspective by comparing it to like financial instruments, new and old, shedding some light on the purpose, intended user, regulatory issues - and more important, on the path Libra must follow to achieve success. The article also exposes the vast gaping holes in Facebook's description of Libra.
John Kiff

Libra: possible risks in Facebook's pursuit of a 'stablecoin' - 0 views

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    The price of the Libra will depend on the commitment to supply coins at the speed demanded. This is not a trivial matter as the Association will have to back new coins with the underlying assets. Consider an occasion in which a Libra hype leads to a very high demand for coins (not unlike what we have seen for bitcoins). To preserve the value of one Libra, the Association will have to mint new coins at the rate demanded and back them up by buying the assets in the underlying composition. It is not obvious that suppliers will be willing to do that for any level demanded.
John Kiff

Facebook is shifting its Libra cryptocurrency plans after intense regulatory pressure - 0 views

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    According to the report, Facebook no longer intends to make the Libra token the centerpiece of its digital payments strategy. Instead, Facebook's Libra project will reportedly transition to supporting both existing government-backed currencies, like the US dollar and the euro, and the Libra token when it is eventually completed and ready to launch.
John Kiff

European Union unsure how to regulate Facebook's Libra - 0 views

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    The EU cannot work out exactly what Libra is according to a memo by European Commission executive vice-president, Valdis Dombrovskis. Dombrovskis refers to the "need to ensure clarity" about what Libra is, but that the information provided by Facebook is not sufficient. Libra is descibed as a "moving target" that does not easily within existing EU law.
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