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Facebook Libra is a stablecoin backed by USD and it is quite different from Bitcoin, but it still works on the principle of decentralization (at least to a degree) which has become major concerns amongst regulators. Not only in Washington but regulators in Europe are also moving quickly to present specific norms and rules for cryptocurrencies.
As noted by European Central Bank’s executive board member Benoit Coeure, financial regulators across the world must act quickly in order to prepare for rising tides of cryptocurrencies into the financial system. He stated:
“It’s out of the question to allow them to develop in a regulatory void for their financial service activities because it’s just too dangerous. We have to move more quickly than we’ve been able to do up until now.”
Blaming the current financial system, national/global regulations and failure of the current banking system to get along with the new crypto technology has slowed down (but didn’t stop) the development and adoption of digital currencies. “All these projects are a rather useful wake-up call for regulators and public authorities, as they encourage us to raise a number of questions and might make us improve the way we do things,” Coeure said.
It is important to note, however, that the European Central Bank’s newly appointed president Christine Lagarde might be more crypto friendly than her predecessor.
Libra’s Entanglement with Regulators and Lawmakers
Facebook’s plan to roll out its own cryptocurrency has raised many policymakers’ deep concerns. Three main financial regulators are working together in order to come up with best respond to the tech giant’s Libra. Bank of England Governor Mark Carney, for instance, has asserted that the bank approaches it “with an open mind but not an open door.”
Facebook’s Libra has also raised regulatory issues in Washington, as many influential lawmakers have demanded to pause the crypto project until several profound questions have been answered. David Marcus, the executive leading Facebook’s Libra and blockchain efforts, will soon take measures in an attempt to legitimize the cryptocurrency endeavor before Congress.
Previously, a number of major international banks have partnered with IBM to launch their own stablecoins. However, this is considered a mere small step compared to the ambitious scope at which Facebook is planning to put Libra on work, which might not only promote the trend of stablecoins but would also increase mainstream adoption of cryptocurrencies. After all, Facebook has billions of active users around the world, and thus the scale at which Libra would expand could be rapid and exponential.