This article is translated from:Libra white paper v2.0 version

Odaily translator | Moni, Azuma

On the evening of April 16, the Libra project led by Facebook was officially releasedWhite Paper v2.0 Version. Since the release of the first version of the white paper in June last year, the Libra project has been strongly questioned by regulators in various countries. After ten months, how will the project answer regulatory questions? What are the new plans for the future? The white paper gives its answer.

The new white paper begins by highlighting four key updates from the original white paper:

• 4. Build stronger safeguards into the design of the Libra reserve assets.

• 2. Improve the security of the Libra payment system with a robust compliance framework;

• 3. Abandon the future transition to a permissionless system while maintaining its main economic attributes;

• 4. Build stronger safeguards into the design of the Libra reserve assets.

1) A new stable currency anchored to a single legal currency is added, and the multi-currency stable currency is named LBR

The first point is crucial. Libra has modified the core design structure of its currency and added stablecoins anchored to a single legal currency, such as the US dollar stablecoin LibraUSD, the euro stablecoin LibraEUR, the British pound stablecoin LibraGBP... and the first version The stable currency anchored to multiple fiat currencies designed in the white paper will become a new token LBR supported by the above-mentioned single-currency stable currency. In this way, individuals or businesses in a specific region will be able to use stablecoins anchored to their national legal currencies directly through the Libra network. The white paper emphasizes that each stablecoin anchored to a single fiat currency will be fully backed by reserves, which will include cash, cash equivalents, and very short-term government securities denominated in that fiat currency. The Libra project stated that it hopes to cooperate with regulators, central banks and financial institutions around the world to expand the types of single fiat currencies anchored in the Libra network over time.

Speaking of LBR, in essence, LBR is the combined assets of the above-mentioned LibraUSD, LibraEUR, LibraGBP and other single-currency stablecoins weighted according to a certain fixed weight, just like the special drawing rights of the International Monetary Fund (IMF) (SDR). The Libra Association will negotiate with regulators to determine the specific weight of single-currency stablecoins that support LBR. The white paper points out that LBR can be used as an effective cross-border settlement currency, as well as a neutral, low-volatility option for countries that have not yet established a single-currency stable currency on the Libra network.

Libra emphasized that this new currency structure can help support a wider range of domestic use cases, and when a country's central bank digital currency (CBDC) becomes available, it can also provide a clear path for seamless integration.

2) Improve the security of the Libra payment system through the compliance framework

Libra's goal is to develop a system that complies with applicable laws and regulations, and that supports Libra's openness and financial inclusion. Libra will provide comprehensive safeguards so that individuals and businesses can trust the security and integrity of the Libra payment system. The Libra Association has absorbed feedback from regulators and will continue to develop a framework for financial compliance and network-wide risk management, as well as anti-money laundering (AML), counter-terrorist financing (CFT), compliance with sanctions, and Standards for preventing illegal activities.

The Libra network will introduce a "Financial Intelligence Function" (FIU-function) that sets operational standards for supporting and maintaining network participants. There are four types of participants in the Libra network, namely: 1. Designated dealers; 2. Virtual asset service providers (VASPs, including exchanges and escrow wallet), or a virtual asset service provider registered or licensed in a FATF member jurisdiction and performing virtual asset service provider activities in accordance with such license or registration (regulated virtual asset service provider); 3. Virtual asset service providers who have completed the certification process approved by the Libra Association (certified virtual asset service providers); 4. Other individuals and entities seeking to conduct transactions or provide services through the Libra network (no custodial wallet).

Uncustodial wallets enable financial inclusion, broad competition, and responsible innovation to serve the unbanked and banked. However, such user activities are more risky, so there are some restrictions on balance and transaction limits. Initially, only designated resellers and regulated VASPs will have access to the Libra network, and the Libra Association continues to develop an accreditation process for other VASPs based on feedback received from regulators, while also targeting uncustodial The wallet builds a compliance framework. The Libra Association intends to enable both certified virtual asset service providers and uncustodial wallets to access the Libra network once the relevant compliance framework is finalized.

3) Abandoning the future transition to a permissionless system while maintaining its main economic attributes;

Abandoning the transition to a permissionless system may be the biggest change next to currency design updates. In the initial white paper, Libra mentioned that it plans to complete the transition to a permissionless system in five years and achieve complete "decentralization". This line has now been reversed. Libra mentioned potential reasons for this change in its latest white paper - regulators had raised concerns about the scope of control of the Libra network as follows: the need to prevent unknown actors from taking control of the system and the removal of key compliance provisions.

Predictably, the change is sure to draw strong criticism of the project from libertarians in the crypto space. Libra also seems to want a shot in the arm for users, saying: "I believe that through an open, transparent, highly competitive governance and service network, coupled with strict due diligence on association members and verification nodes, it is completely possible to Replicate the key economic properties of a permissionless system."

4) Establish strong protection measures for Libra's asset reserve

The Libra Association has had constructive discussions with regulators on how to respond to extreme circumstances, including: 1. how the Reserve will function in a stressful situation; 2. what the Libra Association will offer Libra Token holders Claims and Safeguards.

the way of the future

The latest version of the white paper once again introduces the future development direction of Libra. Since the release of the initial white paper, the Libra Association has had many informative discussions with regulators, central banks, government officials, and various stakeholders around the world to determine the best way to integrate blockchain technology with existing regulatory frameworks. Way.

Operating a responsible payment system for financial services requires ongoing collaboration with key stakeholders at regional, national and international levels. To this end, the Libra network is applying for a payment system license from the Swiss Financial Market Supervisory Authority (FINMA).

"We believe that lowering the threshold for modern financial services should not be about lowering the threshold for regulatory standards."

Going forward, the Libra Association will continue to engage in a constructive international dialogue on ways to harmonize regulatory standards, protect consumers, and expand payment services to marginalized communities. The Libra Association remains committed to public-private partnerships to enable innovation in the financial system. In addition, as central bank digital currencies (CBDCs) gradually become a reality, Libra hopes that its payment system can be upgraded to support these public sector innovations, which is also the design principle of Libra.

1) Libra blockchain

Over the next few months, the Libra Association will work with the community to gather feedback on the Libra Blockchain Testnet and bring the testnet to a production-ready state, while also ensuring protocol and implementation security, performance, and scalability.

l The Libra Association will build well-documented application programming interfaces (APIs) and libraries to enable users to interact with the Libra blockchain;

l The Libra Association will develop a Libra Improvement Proposal (LIP) process, open to community participation and review, which will discuss and review a series of major changes to support the Libra blockchain protocol and software;

The Libra Association will use an open source approach to create a framework for collaborative development of the technology behind the Libra Blockchain;

l The Libra Association will conduct extensive testing of the Libra blockchain, ranging from protocol testing to building network testing with entities such as wallet services and exchanges, to ensure that the system works properly before launch;

l The Libra Association will work to facilitate the development and deployment of the Move language, enabling developers to use the inherent protections of the Move language to develop innovative financial applications. However, this will require working with regulators to define appropriate safeguards for third-party issuance of smart contracts, and exploring other financial programming environments that could benefit from Move language innovations.

2) Libra Reserve

l The Libra Association will enter into a reserve custody agreement with a number of custody service providers with different geographical locations and regulated by global institutions;

l The Libra Association will design a reserve operation process that interacts with designated dealers and ensure high transparency and auditability;

l The Libra Association will work with regulators to determine the specific fixed weights of the single-currency stablecoins that make up the LBR.

3) Libra Association

l The Libra Association will optimize the Council of the Association through an open, transparent and competitive process, and will further absorb more association members from different regions;

l The Libra Association will continue to improve governance mechanisms and adopt key association policies established in accordance with the Association Charter;

l The Libra Association will hire a managing director and CEO, and will build an executive team;

l The Libra Association will establish a Financial Intelligence Function (FIU-function) to support and manage the financial integrity of the entire Libra network. The financial intelligence function will be a center of excellence, promoting best practices and technologies for blockchain payment systems.

l The Libra Association will seek out social impact partners who share its mission and will work with them to establish a social impact advisory committee and a social impact program.

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It remains to be seen whether the new white paper can help Libra overcome regulatory difficulties. On the evening of April 16, the Swiss Financial Market Supervisory Authority (FINMA) has confirmed that it has received a letter from the Libra Association.Pay for license application, and said that it will be reviewed according to the updated white paper. But FINMA said it would neither provide an update on the status of the application nor speculate on when the process will be completed.