What’s next for Libra?
15 October 2019
Facebook’s Libra has seen an exodus of partners in the aftermath of US congressional scrutiny on the project. Of the initial 28 inaugural Libra Project members, 21 are now left with online travel company, Booking Holding being the most recent exit. Booking is the parent company for Booking.com, Priceline, and Kayak.com.
The other members who have made for the exit already are:
- Mercado Pago
Earlier in the week, US Senators Sherrod Brown and Brian Schatz had sent letters to Visa, Mastercard, and Stripe, asking them to reconsider their partnership with Libra or risk heightened oversight from Congress.
G7 report adds further negativity to Libra
Separately, a G7 report issued a warning against global stablecoins, which Libra is modelled after, outlining a series of risks that the asset poses to the economy. These risks could affect economic and financial stability and indeed stymie policymakers’ interest rate management policies.
The report points out that regulatory approval may not be guaranteed even if a project is able to satisfy regulators’ concerns raised by governments and central banks.
Facebook pushing ahead?
Despite these negative developments, odds are that Facebook will continue to push ahead with the Libra development and launch in 2020. However, we believe that the launch might not be as groundbreaking as initially thought and could struggle to gain traction in the global economy.
As it stands, Facebook admits that Libra coins will unlikely become a means of payment for regular real-world transactions in developed countries like the US and in regions like the European Union. Libra will more likely be used as a means of cross-border payments or for settling micro-transactions.
Despite the 7 exits, 21 other organisations just signed the Libra Association Charter in Geneva, Switzerland, paving the way for the project to go live in 2020. The Libra Association also named its board of directors and formalised its management team.
The board members include David Marcus (former Facebook Blockchain lead), Katie Hun (Andreeson Horowitz), Wences Cesares (Xapo), Patrick Ellis (PayU), and Matthew Davie (Kiva).
The association highlighted that about 180 entities have met its membership criteria and could be on the way to being onboarded to the association in the near future through a two-thirds voting mechanism. The association is looking to get 100 companies on board at its launch in 2020.
Watch out for Zuckerberg’s testimony
Meanwhile, readers might want to mark 23 October (2pm UTC) as Facebook founder, Mark Zuckerberg will be expected to testify before the House Financial Services Committee. House members are expected to push Zuckerberg about the Libra project. Zuckerberg’s willingness to meet congressional members shows that Facebook is accepting that regulations are incoming and that the company wants to be a part of the conversation.
At Zipmex, we believe that government regulation and oversight is crucial for the development of the industry. We welcome such prudent and savvy regimes and note that we are currently licenced and regulated by CEZA and are currently under consideration by the Thai SEC.
With regards to Libra, we believe that the road for the global stablecoin will likely be bumpier than many had originally anticipated. The initial euphoria and subsequent bump in digital asset market prices may be tapering and could potentially correct as we have recently seen a correction in digital asset stalwart, BTC’s price.
We thus advise our users to be prudent and to exercise caution when investing in any digital asset and to be mindful of current developments before investing.
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