Facebook is moving forward with its cryptocurrency project Libra, a stablecoin that will be pegged to a basket of currencies, including the US dollar.
Despite harsh criticism and pushback from regulators around the world who are concerned that the social media tech giant can leverage its user base of over two billion people to rock the entire global financial system, members of the Libra Association, based in Geneva, say the company remains undeterred.
In remarks made to Reuters on Thursday, Patrick Ellis, one of the Libra Association’s five board members, the scope of the roll-out is contingent upon talks with regulators.
“At this stage, there is no strategy set in stone for the markets or the product, or how it will actually get rolled out.”
It’s an uphill battle.
A bi-partisan bill introduced in the US in November would classify Libra as a security under the law.
The “Managed Stablecoins are Securities Act of 2019” is intended to help consumers understand the new types of digital assets on the market so that they can make more informed decisions. If passed, it would impose more regulatory scrutiny on the Libra project.
Currently regulators are struggling to reign in the crypto industry and its growing class of digital assets. While promising to deliver a new open financial system, they still lack a clear regulatory framework in the US. The ambitions of crypto entrepreneurs vary dramatically. Some projects aim to work alongside traditional payment rails and platforms, while others are offering new solutions and types of financing that are based on decentralized networks.
And still other projects appear to be in direct competition with the US dollar and its monetary system, aiming to deploy algorithm-rich and sophisticated features that can control the supply of digital assets and offer numerous benefits for consumers by cutting out fee-charging middlemen and making transactions faster, cheaper and more transparent.
According to Kenneth Blanco, the Director of FinCEN, stablecoins aren’t new. He describes this kind of cryptocurrency, which is pegged to fixed assets to achieve a stable price, as a type of convertible virtual currency.
“This means that accepting and transmitting activity denominated in stablecoins makes you a money transmitter under the Bank Secrecy Act. It does not matter if the stablecoin is backed by a currency, a commodity, or even an algorithm — the rules are the same. To that point, administrators of stablecoins have to register as MSBs with FinCEN.”