This article comes fromThe Block, Originally by Frank Chaparro

Odaily Translator |

This article comes from

, Originally by Frank Chaparro

Odaily Translator |

The Libra Association is considering major changes to the asset-backed model of its stablecoin, The Block has learned.

Facebook officially released the Libra white paper in June last year. In the white paper, Libra's value is described as pegged to a basket of fiat currencies, as well as other assets. Two sources familiar with Libra's progress said that the Libra Association is considering whether it should abandon the proposed "basket of fiat currency + other assets" model and switch to a "pure dollar" backing model.

The new model is believed to help ease the concerns of U.S. regulators and lawmakers, as some regulators believe that Facebook's stablecoin plan is posing an "immediate threat."

The reporter contacted the official spokesperson of the Libra Association, but it refused to comment on the rumors.

"I think it's a welcome change," Kristin Smith, head of the Blockchain Association, which promotes blockchain technology, said in a phone interview. Lawmakers' main concern about Libra is that Libra could weaken the dollar, So if Libra does switch to only being backed by the U.S. dollar, it can solve a lot of concerns.”

In addition, a report by German media FinanceFWD at the end of January stated that the Libra Association may be considering issuing multiple currencies, each of which is backed by a specific single legal currency, including the euro. The report also noted that several European regulators are in contact with members of the Libra Association about the plan.

"a welcome change"

"I think it's a welcome change," Kristin Smith, head of the Blockchain Association, which promotes blockchain technology, said in a phone interview. Lawmakers' main concern about Libra is that Libra could weaken the dollar, So if Libra does switch to only being backed by the U.S. dollar, it can solve a lot of concerns.”

In fact, there may be a reason for this shift.

Zuckerberg has said Facebook may withdraw from the association if it does not receive the necessary regulatory approval. Currently, a draft law has emerged as a potential roadblock to Libra. "The Stablecoins Are Securities Act of 2019" is a direct response to Libra from opposition lawmakers. The draft proposes to treat “managed stablecoins” as “investment contracts” that would constitute securities within the meaning of Section 2(a) of the Securities Act of 1933.

Although Facebook does not describe Libra as a "managed" stablecoin, the white paper describes the reserve assets designed to support Libra's value as a basket of bonds, currencies and government securities, which it says will help maintain Libra's price Stablize.

Facebook also appears to have removed certain aspects of the token structure from the white paper, including dividends paid to member companies through reserve assets and free investment tokens for member companies. In short, it's a sign that Libra isn't shy about tweaking its original design.

What is the impact on other USD stablecoins?

Although this change is still brewing, its impact is still intriguing - will Libra's entry threaten other US dollar stablecoins?"A person in the industry believes that Libra's entry may not pose a huge threat as people imagined. For example, two regulated stablecoin providers, Paxos and Circle, have successfully carved out their own marketplaces, and Facebook hasn’t hinted at exploring this space."As far as Paxos is concerned, besides how to expand the market share of PAX, the company is also concerned about how to build its "stable currency as a service (SAAS)" platform. The company's technology already powers stablecoins issued by Binance and Huobi, and it is now looking to collaborate with others in the financial services industry.

Paxos CEO Chad Cascarilla said in a statement:

We have already seen initial interest in blockchain from established multinational corporations, and in 2020 we will see these companies make greater efforts in the blockchain space by exploring use cases for stablecoins.