This article comes fromForbes, the original author: Madhvi Mavadiya, a reporter from Finextra, a financial technology media, and a contributor to Forbes’ financial technology column

Odaily Translator |

Odaily Translator |

It hasn't been a good week for Facebook's digital currency, Libra.

The Swiss Financial Market Authority (FINMA) was the first to attack Libra. Just after a six-member delegation led by Maxine Waters, a member of the U.S. Congress and chairman of the House of Representatives Financial Services Committee, visited Switzerland, the Swiss regulators who were originally friendly to Libra suddenly took an attitude Big turn.

In July, the Swiss Federal Data Protection and Information Commissioner (FDPIC) claimed that David Marcus, head of the Facebook encryption project, made a statement at a congressional hearing that it was inappropriate because they had not received any personal data processing instructions related to Libra. The regulator also requested that the Libra Association should inform the regulator of the project's current status details so that it can assess the extent to which its advisory capacity and supervisory powers will be applied.

Now, the Libra Association has submitted a ruling request to the Swiss Financial Market Supervisory Authority to clarify its regulatory status and seek to obtain a payment system license from the Swiss financial watchdog.

Then came the two great powers of Europe: France and Germany.

As of this writing, according to Xinhua News Agency, the German and French finance ministers have issued a joint statement in Helsinki, the capital of Finland, reaffirming the importance of monetary sovereignty and opposing the implementation of Libra, an encrypted digital currency planned by the US social media company Facebook, in Europe. In the statement, the two countries believe that Facebook's Libra cryptocurrency plan has failed to properly address the above risks. In addition, the two countries also recognize the need to improve the efficiency of the existing international payment system. At the European level, the governments of the two countries are also determined to address the challenges posed by virtual currencies to financial security, investor protection, prevention of money laundering, and financing of terrorism. At the same time, they call on all banks to work together to improve the European payment system and encourage European central banks to accelerate Work on public digital currency solutions matters.

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Under the pressure of regulation, we can't help but ask: Should Libra really be "blocked"?

At least in the view of Robert Courtneidge, the chief global payment lawyer and CEO of the international payment company Moorwand, we should actually embrace and accept the stable currency Libra instead of fighting against it or blocking it.

Today we may have to face such a problem: the future of payment is likely to depend on the development of the blockchain industry and the way new currencies are created. Although the emergence of cryptocurrencies has caused a series of problems, these problems are also the same in traditional industries. For example, when prepaid cards first appeared, there were many money laundering transactions. However, as cryptocurrencies stand out, some bad problems that existed in electronic currencies in the past have actually been solved, but even so, there are still many misunderstandings and rumors about cryptocurrencies.

Robert Courtneidge added:

"It's understandable that people blame cryptocurrencies. After all, it's much easier to blame than to give a good solution. However, if not handled properly, misjudgment can cause a very large and positive industry. cause serious injury."

Robert Courtneidge realized early on the great potential of cryptocurrencies in the new era. He believed that "neutrality" (neutrality) would bring great impetus to the international banking and international payment industries, and optimize the current business process by eliminating red tape. system.

Facebook released the Libra white paper a few months ago. The digital currency is managed by a non-profit organization called the "Libra Association", which is responsible for verifying Libra blockchain transactions and managing reserves. It has attracted Visa, Mastercard, PayPal , Uber, Lyft and Spotify, among others.

Because Libra allows global users on Facebook's platform to conduct financial transactions, regulators in many countries believe that it will pose a threat to the current banking industry. However, Robert Courtneidge said that a few years before Facebook announced the launch of Libra, he had discussed the so-called "intermediate currency" with the central banks of some countries, which is a currency that can be used to convert national central banks to issue legal tender on the blockchain. currency, which is used like the pound sterling settlement system owned by the Bank of England.

Robert Courtneidge stated that those entities in the Libra Association have no control over Libra, and Libra provides a transparent and immutable way to transfer value (if they can implement it properly). Although Libra was originally funded and created by Facebook, it will later be handed over to the entire association to be responsible for maintenance and system upgrades.

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Libra can set up special nodes for governments and national banks

Robert Courtneidge believes that there is no reason why Libra cannot give certain specific access rights to relatively large institutions. For example, it is completely possible to set up special nodes for governments and national banks. trade. If built in the right way, civil liberties and state rights can still be protected, especially with regard to countering terrorist financing and money laundering.

Robert Courtneidge says:

“This will create a utopian paradise where value can move freely in an environment where nothing bad can happen. Even if money laundering and terrorist financing do happen, because the whole system is transparent, immutable, and traceable, these Illegal transactions will also be placed on top of the system with nowhere to hide."

However, according to Robert Courtneidge, once Libra sets up special nodes for governments and national banks, it may trigger various "conspiracy theories." For example: There are ways governments can hide their own transactions while still being able to see other people's payments, should this be allowed? Why can't governments follow blockchain's immutability and transparency requirements? Are you responsible for doing this? Does this situation create more liability issues? etc.

Answering these questions becomes extremely tricky when you lose control over the transfer of value. Simply put, banks are actually more like a system of record for moving funds, and they are unwilling to break away from the value transfer system, because this is the lifeblood of the bank's firm control over value transfer. But with the emergence of Libra, you will find that Facebook has actually created a new global central bank, and it also poses a huge threat to the commercial viability of other banks.

The next question is, if Facebook is creating a new alternative global settlement currency, will it destroy the dollar? The U.S. has always hoped to use the dollar to "run wild" around the world, but the Libra stablecoin fits the bill, and being backed by Facebook means it can be updated regularly and is safe.

In his paper "Regulating 'Unstable' Money", Robert Courtneidge wrote:

If all financial technology companies use their financial, data, and social power to promote stablecoins like Libra, then we can fully expect that it will be difficult for Congressman Maxine Waters to stop the development of the cryptocurrency industry.

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Switzerland was chosen as the headquarters of the Libra Association because of "neutrality"

In fact, Robert Courtneidge believes that the reason why the headquarters of the Libra Association chose Switzerland instead of the United States is because Switzerland is a neutral country. Interestingly, the reason why U.S. Congressman Maxine Waters led a six-member delegation to visit Switzerland and discuss Libra-related matters with local regulators is because the U.S. does not want to lose its position as a global leader in financial services.