On the week of July 15, 2019, Facebook met in front of a US congressional committee to discuss the tech giant’s ambitious plans of creating a global digital currency named Libra. At the hearing, US congressional staff probed Libra executives as well as notable cryptocurrency experts on the project’s intentions and concerns.
The takeaways from the hearing included strong concern from central authorities that Libra could pose a significant risk to the global financial system. These risks include money laundering, terrorist financing, and loss of regulatory power.
As a Swiss-entity, the Libra foundation promised to comply with international financial bodies and cooperate in general with lawmakers. The goal is simple. Libra wants to create financial inclusion for millions of unbanked people around the world using a stable coin. There are expected to be many more hearings to further the conversation.
With a wide range of opinions presented, this article turns to industry experts and entrepreneurs to get their feedback on Libra and the future of banking and digital currencies.
Francis Silva, CEO of Intergalaxy
At Intergalaxy, we have noticed two main reactions from the recent Libra news. One was from critics that feel threatened or concerned and the other from supporters that see the project’s potential to create a new global financial solution. Both are completely understandable given how early it is in the project’s inception.
The critics see Facebook, the company backing Libra, as an entity that has proven to be unreliable with data and will ultimately be pulling the strings to stipulate Libra’s price. According to the whitepaper and intentions stated, there are significant concerns about the viability and scalability of the project. Also, the target audience is largely Facebook users so the ability to control these users by Facebook and Libra could become problematic if the safeguards in place fail.
The supportive group, on the other hand, is the same community that already finds itself in the billions of active users that understand digital currencies and can act as spokesman to the rest of the world. In this scenario, visibility to the benefits of cryptocurrencies will be bigger and it will benefit more people, globally speaking.
In these meetings, we may have finally seen the recognition that the cryptocurrency industry deserves. In either way, the impact on the industry will be huge.
Antoni Trenchev, Co-Founder and Managing Partner of Nexo
At Nexo, we are happy to see that the current focal point on Libra and the cryptocurrency market will help spark the long-awaited conversations on Capitol Hill about regulation surrounding digital assets that will benefit the entire crypto space and especially crypto banking which is the field that Nexo dominates. It is our hope that business-friendly and technology-fostering rules will be the by-product of this political discourse.
Paving the way to financial inclusion for the 2 billion underbanked that Libra can access via the platforms maintained by Facebook is the financial innovation of phenomenal proportions. Even more so given the fact the concept of Libra will prevail as it offers a lot of advantages such as ultra-low-cost cross-border transactions, cheaper acquisition of payments for merchants and no FX cost. It’s only a matter of time and adequate regulation basis for its revolutionary potential to be put in widespread use.
The value propositions by entities of financial innovators are obvious everywhere and companies like Nexo are already counteracting another important plague of our time – the inability to earn high-yield interest in a safe manner. Given the extremely low-rate environment facilitated by the FED and ECB, Nexo offers 8% annual returns, incredibly attractive to both retail and financial institutions. We are interested in further teaming up with Libra in this endeavor.
Nexo has always shown its support to the big-movers in the space, further attested by the news of transitioning at least 10% of its NEXO Tokens from the Ethereum blockchain to the BEP-2 standard of Binance’s own blockchain called ‘Binance Chain’ in order to ensure faster transactions, lower fees and the trading of NEXO on the Binance DEX.
This is the latest move in a year-long collaboration between Nexo and Binance which began in July 2018 when Nexo became the first company to ease the selling pressure and allow holders of Binance Coin (BNB) to borrow against their cryptocurrency using Instant Crypto Credit Lines™. The newly built two-way token swap mechanism will allow holders to convert BEP-2 to ERC-20, and vice versa, while paying #ZeroFees and will be available within the Nexo Wallet on both web and mobile.
The more legitimate strategic partnerships the industry sees, such as this, the more the public will see the value in the industry. Libra is a good example with its consortium of backers.
Shigeki Kakutani, CEO and Founder of Quras
The deep concern shown by U.S. and global policymakers around Libra’s initial vision is justifiable and not surprising. By proposing the creation of an open payment and developer network with limited, hands-off regulatory compliance, Facebook should have foreseen this sort of push back. Given that Facebook has over 2.3 billion active monthly users, the balance of innovation and regulation is a careful one.
Even pre-Libra, Facebook has had to face increasing criticism thanks to its data harvesting practices and the significant data hacks its users have fallen victim to. If Facebook can’t secure its current social platform and messaging apps with proper security and privacy technologies, then why should its user base trust in Libra?
Privacy issues are abound in the big data industry, which encompasses any company that has, uses, and sells large amounts of personal data, such as Facebook. Protecting the privacy of both users and corporations while allowing all to realize the value of blockchain technology is one of the main reasons we built Quras in the first place.
We cannot get to a place of trusted blockchain adoption without giving individuals a digital ID that allows them to control their identity in detail while putting a data permission hierarchy into place with various privacy levels for any given purpose. This will ultimately allow regulatory compliance and more real-world use cases to surface.
Andy Cheung, Head of Operations of OKEx
One thing is undeniable with the recent news about Libra, digital currencies and blockchain technology just took the global stage. I see this as an extremely positive thing despite the visible hesitation seen by lawmakers. With any new industry, questions and concerns are to be expected and we welcome that as an exchange.
Right now, we need to take this opportunity to continue educating the people around us about digital currencies and their massive potential and give confidence to them. This is why OKEx recently donated $4.5 million Bitcoin to its perpetual swap market insurance fund to support the Power Lunch, a charitable luncheon between a handful of crypto magnates and legendary Wall Street investor Warren Buffett in our way. This lunch is a great way to generate discussions but we decided to place our resources where the crypto community can directly benefit.
The more hearings we see the clearer this should all become. A couple of brave congressmen showed astute understanding of the industry during the hearings proving that even lawmakers can grasp the intricacies of digital currencies when they want to.
Will Libra launch and be a success? Time will tell. For the awareness of digital currencies, the news is welcomed and we look forward to the process of educating and serving millions of more customers on OKEx in the near future.