Libra moves slowly and carefully. How do regulators respond?

Haters gonna hate, but a locomotive called Libra continues to make its way. Despite the withdrawal of large partners from the game, 21 organizations signed the charter of the Libra Association in Geneva. In addition, the association approved a board of directors and formed an executive group of the consortium.

Someone is losing, someone is finding

Who said that everything will go smoothly and calmly? The Libra Association made its debut in the media field in June this year, and Facebook announced a list of 28 major firms to join at that time. So, over the past week, Visa, Mastercard, PayPal, Booking Holdings, eBay, Stripe and Mercado Pago announced their “retreat”. Some of them expressed concern about the negative regulatory response that the project faced. One needs to remember that the "letters of happiness" were sent by American politicians, in whose eyes Libra poses a threat to financial stability.

Despite pressure, the Libra Association stated that more than 1,500 organizations have expressed interest in joining the project, with 180 meeting membership criteria. Two-thirds of the votes of 21 members of the board are needed to add new members to the project. It turns out that the big players were afraid, and the smaller ones felt some appetite for risk.

What is going on inside the project

In addition to Calibra, the major player in the project, the association includes Coinbase, Xapo, Anchorage, Bison Trails, Creative Destruction Lab, Andreessen Horowitz, Thrive Capital, Ribbit Capital, Union Square Ventures, Breakthrough Initiatives, Illiad, Vodafone, Farfetch, Uber, Lyft , Kiva, Mercy Corps, Women's World Banking, Spotify and PayU, as per a press release. No previously unknown participants were included in the list.

Of course, Facebook is still a key one. Calibra CEO and Facebook blockchain expert David MARCUS took a seat on a five-member board. Other board members include representatives from Andreessen Horowitz, Xapo, PayU, and Kiva.

An amazing irony: despite the fact that the project was abandoned by PayPal, its “graduates” have remained and will play leading roles in the executive team of the association. These include Bertrand PEREZ, Dante DISPARTE and Kurt HEMECKER.

From a technical point of view, Facebook representatives did not publicize their achievements.

The situation from the outside

The stablecoin is planned to be backed with a basket of fiat currencies, including:

• US dollar (50 percent),
• Euro (18 percent),
• Japanese yen (14 percent),
• British pound (11 percent)
• Singapore dollar (7 percent).

With that in mind, financial regulators are still trumpeting that Libra and similar projects are destabilizing the global monetary regime. Despite repeated statements by David Marcus that the project welcomes regulatory oversight and does not seek to replace the dollar, Libra has been harshly criticized.

Ministers in France and Germany oppose the project and are proclaiming the ban of Libra in EU; India outlawed it, and Rep. Maxine WATERS in the United States called for a moratorium on the project until all regulatory issues are resolved.

According to Reuters, it became known that on October 17, the G7 working group submitted a report in Washington, which states that stablecoin projects should not be launched until all international risks are excluded. As Benoit COEURE, member of the Executive Board of the ECB said:

“The G7 believes that no global stablecoin project should begin operation until the legal, regulatory and oversight challenges and risks.”

While Facebook initially focused on a launch date in early 2020, recent events have cast doubt on this schedule. It seems that any delay in launch will be caused by regulatory issues more than by technical ones.

A similar situation is experienced by the long-standing counterpart of Facebook Pavel DUROV with the Telegram Open Network project. We can say that their front is now unified: large-scale, global crypto projects against the Leviathan of the global financial system. And so far, the situation is not in favor of innovators.