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Facebook will not launch the cryptocurrency Libra until it has “fully addressed regulatory concerns,” according to David Marcus, the head of Facebook’s Calibra. The remarks are prepared testimony he plans to give tomorrow, in front of the US Senate Banking Committee.
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Facebook’s proposed creation of Libra is a wake-up call. It makes inescapable the need for rapid, international coordination of financial regulation. Without mechanisms to ensure consistent application of coherent global rules, we may find ourselves in a world full of “low-quality finance havens” that exist to evade financial regulations—just like “tax havens” that exist merely to evade taxes.
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The Senate Banking Committee staff reached out to Caitlin Long pursuant to her recent Forbes article on Libra. Here is her formal written testimony.
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“A large platform utility may not establish, maintain, or operate a digital asset that is intended to be widely used as medium of exchange, unit of account, store of value, or any other similar function, as defined by the Fed.”
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“The Canadian Securities Administrators (CSA) are focusing on understanding and regulating distributed ledger technology (DLT) and its related components. The Canadian securities regulatory agency included a section on DLT and crypto assets in its Business Plan 2019–2022 that was published on July 13. “
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Japanese authorities have set up a working group to discuss the impact Facebook’s proposed Libra digital coin could have on monetary policy and financial regulation, government sources said, ahead of a G7 finance leaders’ gathering where the topic will be high on the agenda.
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The UK Royal Mint will provide crypto custodial services for the first time everand is participating in the launch of new crypto-asset temtum. TEM is a zero-fee P2P crypto-asset aimed at creating a “new world of financial freedom away from centralised institutions.”
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The IMF is watching the growth of so-called stablecoins closely and today published a paper that identifies their benefits and risks, and highlights some regulatory issues that are likely to emerge.
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A “self-sovereign identity” system, in which consumers are able to protect their own data, is being developed by the participants for faster services. For instance, a student can be issued a new ID in less time as they won’t have to submit related papers in person, thanks to blockchain technology.
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Blockchain validation platform VeriBlock produced almost 25% of on-chain Bitcoin (BTC) transactions in 24 hours July 14, the company confirmed on social media
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The U.K. government has drawn up an action plan aimed to combat financial crimes that it says will include “action on cryptoassets.” The new Economic Crime Plan from H.M. Treasury and the Home Office is aimed to overhaul the the way economic crime is tackled, building better cooperation between government, law enforcement and the private sector.
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Ireland-based cryptocurrency exchange Bitsane disappeared without a trace last week, likely taking hundreds of thousands of users’ assets with it. Account holders told Forbes that attempts to withdraw bitcoin, XRP and other cryptocurrencies began failing in May, with Bitsane’s support team writing in emails that withdrawals were “temporarily disabled due to technical reasons.” By June 17, Bitsane’s website was offline and its Twitter and Facebook accounts were deleted.
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Japanese crypto exchange Bitpoint has become the latest exchange to suffer a major loss of funds. Its loss of $32 million—in five cryptocurrencies.
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In terms of settlement finality , subject to certain conditions, proof-of-work settlement is preferable to legal settlement finality. However, those conditions are not likely to be met as they pertain to the well-known drawbacks such as lack of scalability, excessive energy use and the 51% attack vulnerability. Future designs of new types of blockchains will need to consider these shortcomings in order to enable the regulated industry to benefit from this technology innovation.
