Editor's Note: This article comes fromNakamoto Shallot (ID: xcongapp)Editor's Note: This article comes from
Nakamoto Shallot (ID: xcongapp)
Nakamoto Shallot (ID: xcongapp)
, by Rakesh Sharma, published with permission by Odaily.
Five months after its launch, little is known about Facebook's Libra. But Congress now has the opportunity to get answers directly from Zuckerberg.
Facebook CEO Mark Zuckerberg (Mark Zuckerberg) will testify before the U.S. Congress on October 23 on "Facebook's Inquiry and Its Impact on Financial Services and Housing," and Zuckerberg will be the only witness.
Since its launch in June, Libra has drawn questioning and condemnation from lawmakers and international organizations around the world, in part because of its lack of details.
After Facebook released the Libra white paper in June, it did not continue to disclose more information about the token. Even Libra co-founder David Marcus didn't have an answer during a congressional hearing in July.
Zuckerberg's presence will give the U.S. Congress a closer look at a blockchain project that could have a major impact on the world economy. Those are the three questions lawmakers should probably be asking him when they meet next week.
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1. Who will oversee Libra?
But given the breadth of its operations and lack of detail, identifying the right regulator has been difficult. If this is extrapolated to a global level, the regulatory issues multiply. In previous interviews, Marcus has stated that developers who develop applications on its blockchain are responsible for complying with the laws of their respective jurisdictions. This is an approach commonly used by other blockchain projects, such as Localbitcoins (a peer-to-peer funds transfer mechanism).
But the problem is that, at least in Facebook's case, the (regulatory) bar it faces is higher. This is mainly because of Facebook's user base and business all over the world. In a decentralized money transfer system, financial service providers such as PayPal are able to take responsibility for such operations because they provide the means to do so.
However, this is not possible in a decentralized system. For example, in money laundering cases, the division of responsibility is not clear, as a payment app in one jurisdiction may not comply with AML/KYC obligations, but use Libra to transfer funds to another similar entity.
2. How does Libra plan to distribute tokens?
According to its white paper and related materials, Libra plans to distribute and sell tokens through authorized resellers. However, apart from the fact that this approach will further centralize Libra, it has not yet disclosed the mechanism and related requirements for becoming its authorized reseller.
But this is important because authorized resellers play an important role in the Libra ecosystem, similar to the role commercial banks play in the economic system.
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3. Is Libra a security?
The Libra project is managed by the Libra Association, a consortium of established companies and nonprofits that will each contribute $10 million to its reserve. They are also responsible for running Libra nodes, which mine Libra tokens with "low volatility."
The U.S. Securities and Exchange Commission (SEC) divides cryptocurrencies into two categories: utility tokens and security tokens. The Howey test developed by the SEC became the standard for judging whether a token is a utility token or a security token.
According to the definition of the US SEC Howey test, Libra may be defined as a security at present. The test utilizes four dimensions to determine whether a token is a security, namely investment deed, profit expectation, use of a third party for promotion, and existence of a general enterprise.
