Shopify Joins Facebook-led Libra Association To Help Build Stablecoin Payment Network

E-commerce platform Shopify has announced that it has joined the Libra Association. This means that the online shopping firm is the latest entrant of the Facebook-led stablecoin project. The entry of Shopify into the association comes barely a month following Vodafone’s pull out with the aim of developing its solo virtual payments platform. This marks the first time the organization is admitting a new member since it was created.

In a blog post, Shopify stated that it aims at working with other members to develop a payment system which can work everywhere in the world.

Libra was released by Facebook last year to work as a worldwide payment system with the Libra stablecoin pegged on various global currencies. A governing council to guide the execution and implementation of the project was formed in October and named the Libra Association in order to decentralize the stablecoin’s leadership albeit on paper. However, Facebook is not a member of the council but Calibra, its subsidiary, is a member.

The Libra Association brings together various firms such as Coinbase, Andreessen Horowitz, Anchorage, Xapo, Bison Trails, Union Square Ventures, Uber, Spotify, PayU, among others.

Other firms like PayPal, Mastercard, eBay, Visa, Booking Holdings, Mercado Pago and Stripe were initially to be members of the organization but withdrew from the project before its official launch, CoinDesk reports. Vodafone has been a member of the council but withdrew last month.

Shopify stated that it is joining the association in order to be active in the development of an infrastructure which empowers the majority of entrepreneurs across the globe. The press release also stated that most of the existing financial infrastructure in the world is not developed to scale in the right manner to meet the needs of online commerce.

Dante Disparte, the policy head in Libra Association expressed the organization gratitude in welcoming its 21st member. He added that Shopify will bring immense expertise and knowledge to the Libra project, since it is present in more than 175 countries with more than 1 million businesses. He added that Shopify will be crucial in the development of a financial system that will efficiently serve billions of people.

Read Original/a>
Author: Joseph Kibe

We Left Facebook Led Libra Association Due Lack Of Transparency: MasterCard CEO

MasterCard’s Chief Executive Officer has said the payment processor abandoned the Libra project, which was led by Facebook after realizing that there were some issues regarding its business model as well as some revolving regulatory compliance.

Ajay Banga, the president and CEO of MasterCard since 2009 recently sat down with the Financial Times and had a candid conversation pertaining to the Libra project. According to Ajay, his attitude towards this project began to weaken when some of the members in this project advanced proposals that would have seen it get linked to Calibra, a proprietary digital wallet.

His problem with this proposal stemmed from the fact that when the idea to develop Libra was first muted, the currency was supposed to be all-inclusive. It was to be accessible to all people across the globe. Banga told the Times that:

“It went from this altruistic idea into their own wallet. I’m like: ‘this doesn’t sound right.’”

Global Financial Inclusion

Banga noted that financial inclusion would imply that governments and other authorities would be in a position to pay its people using a given currency. Once paid, the recipients would be in a position to understand how that currency is used, and would thus be able to use it in their day-to-day lives, e.g., paying for their daily food supplies. He went on to note that:

“If you get paid in Libra [coin]…. which go into Calibras, which go back into pounds to buy rice, I don’t understand how that works”

According to the CEO, the lack of a viable business model also raised some concerns for MasterCard. Based on the proposals being put forward, the proponents of the project had not identified a way in which the Libra Association would start making money after launch, which would then make it profitable.

He noted that when an investor is unable to understand how money is being made, it may end up being made in ways that he or she will not be proud of. Other issues that concerned him was the lack of commitment by the project members to abide by data management, AML, and KYC rules.

Read Original/a>
Author: Daniel W

Facebook’s Libra Stablecoin Put Central Banks On Notice, Causing Bankers To Look Into CBDC’s

A former Executive of the Bank of Japan (BOJ) has said that Facebook’s Libra prompted Central Banks to invest more resources in Digital Currency research sooner than expected. According to a report by Reuters on Jan 22, Hiromi Yamaoka, a former head of settlements and payments at the BOJ, noted that regulators might have done so to keep Libra in check besides tapping into opportunities in blockchain.

The regulation of digital currencies is still a grey area in FinTech; central banks across the world are yet to figure a proper regulatory ecosystem. However, efforts are underway by a number of regulators in developed economies to address the underlying challenges in token economies. So far, countries like Switzerland, Sweden, Canada, Japan, Britain and the Euro Zone have already agreed to work collaboratively on the use case of digital currency. Yamaoka implied:

“The latest decision is not just about sharing information. It’s also an effort to keep something like Libra in check […] Major central banks need to appeal that they, too, are making efforts to make settlement more efficient with better use of digital technology.”

Hiromi told Reuters, Central Bankers have to keep up with the incentives that come with digital payments and settlements;

“Something like Libra would make transactions costs much cheaper. Major central banks need to appeal that they, too, are making efforts to make settlement more efficient with better use of digital technology.”

Central Bank Digital Currencies (CBDC) in Monetary Policy

Hiromi currently a board member with IT consultancy giant, Future Corp, is still in touch with policy implications having worked at the BOJ. He countered the narrative by some academics who recently argued that CBDC’s could be used to driven interest rates further down to negative values. Hiromi said,

“There are increasing doubts about the effect of negative interest rates as a policy tool.”

“If so, do you want to issue CBDCs for the sake of deploying a policy with questionable effects?”

As it stands, China is the most advanced in terms of research and a CBDC development for its ecosystem. The project is expected to launch in 2020 although not much has been revealed about its specifics. Peer economies like the Euro Zone and Japan have instead focused on blockchain implementation noting that they have no short-term plans to issue a digital currency.

Read Original/a>
Author: Lujan Odera

Reserve Bank of Australia Looks To Deny Cryptos Like Facebook’s Libra Until Regulations Are Met

When it comes to Libra and the viability of central bank digital currencies (CBDCs), the Reserve Bank of Australia (RBA) has announced it has serious doubts.

RBA officials said in December last year they don’t believe cryptocurrencies will ever take the place of money issued by governments. While Libra and CBDCs are believed to promote financial inclusion, RBA has assessed their innovation in the global fintech space and concluded they’re redundant solutions.

RBA Has a Team Evaluating New Tech for the Country’s Payments System

Since 2018, the RBA has had their own research group that assess’ new payment structures and technology involved for the country. This team evaluated CBDCs and what a “wholesale settlement system” can do on a private Ethereum (ETH) network, as to attempt understand better if tokens could be efficient when it comes to commercial banks issuing currency.

CBDCs Encouraged by Some Central Bankers

There are some central bankers, Mark Carney and Christine Lagarde included, who encourage CBDCs, not to mention the People’s Bank of China (PBOC) is currently testing the impact on the public of its future digital Yuan. However, RBA thinks an Australian digital currency would only disrupt the country’s financial system at this point, especially when it comes to the retail industry using it. It cites a research done by the accounting company EY and that discovered a CBDC wouldn’t be effective to promote Australia’s fintech sector.

The RBA Doesn’t Think Cryptocurrencies Have a Future

After watching the asset class for years, the RBA doesn’t see a future for cryptocurrencies, especially since these aren’t widely accepted or used as payment and their volatility is more popular among speculators, not among ordinary people. Philip Lowe, RBA’s governor, doesn’t see the role of Libra in a country that already has a very efficient electronic payment system like the NPP, which was introduced in 2018 and allows users to make transactions using their email or phone number. While backed by the RBA, many commercial banks didn’t support the NPP, with RBA describing it as disappointing in June 2019.

Read Original/a>
Author: Oana Ularu

Libra Association Vice-Chairman Calls Bitcoin An ‘Exciting Asset’ But ‘Not For Payments’

According to Dante Disparte, the Libra Association vice-chairman, Bitcoin isn’t a means of disbursement. Disparte said this when speaking to early adopters of tech and gadget fans in Las Vegas who had attended the Digital Money Forum at CES (Consumer Electronics Show). Disparte noted that:

“The bottom rung of the ladder of economic mobility is payment access.” He went on to note that” crypto just isn’t cutting it on payments.”

He mentioned that this was the sole reason he was fascinated in what Facebook was trying to create with Libra.

The Libra Association comprises of a grouping of numerous corporations which seek to ultimately release the Libra stablecoin. The stablecoin will be a coalesced digital asset designed by the social networking giant. It’s intended for use by the millions of people around the world who currently lack access to the services provided by modern-day banking institutions.

Each corporation involved in its development would operate a node. However, the only companies that would be allowed to do so are those that would receive the formal go-ahead from the existing members.

While the cryptocurrency is expected to be more decentralized compared to existing finance, there’s a difference in that the asset is not permissionless, as is the case with ethereum and bitcoin.

Disparte added that Libra was making an attempt to try and solve complicated issues.

Pushback

Akin Sawyerr, the strategy leader on the Decred Project stated that he was not convinced that a group of corporations interested in their own interests would do finances any better compared to the devolved systems. He added that:

“The only way to really get there is to empower the individuals to have some base-level sovereignty.”

By independence, what Akin was referring to was ensuring that individuals had complete control over their finances. When you look at it in terms of bitcoin, when the crypto asset owner has control over their keys, it means that no other person can take control over that particular asset.

Sawyerr doesn’t believe a permissioned system being run by a collection of big corporations would be resistant to censorship.

Read Original/a>
Author: Daniel W

Central Bank Chief Says Facebook’s Libra Would Have ‘Greater Potential’ in Emerging Markets

  • Germany testing a blockchain as a supplement to the previous central, account-based solution
  • Facebook’s Libra will create an exchange rate risk for the users
  • It has the potential to become a dominant player right from the start

On the backdrop of Germany’s second-largest bank, DZ-Bank’s report that says crypto usage is “just a matter of time,” cryptocurrencies made its way into 2020. As DZ analyst Sören Hettler talked about a “change in citizens’ expectations,” central banks are working on their own digital currencies.

However, Bundesbank President Jens Weidmann doesn’t believe in going with the state right away. He said:

“In a market economy, it is first up to the company to develop an appropriate offer for customer requests. Competition gives legs to market participants.”

As for the one the bank is developing, he says it is about payment transactions between the central bank and other banks.

“We are testing a blockchain as a supplement to the previous central, account-based solution,” said Weidmann. But initially blockchain, he says is “no more efficient than a central processing.”

And China might be ready to launch its central bank digital currency, but Weidmann says they have a different political system, adding that “a social market economy will ultimately find better solutions in a free society.”

Sweden is another one that has plans for e-Krona as cash gets increasingly out of use. But in Germany, as Weidmann says three-quarters of all payments are still made in cash. Even then, deposits with banks are another available option.

But he assures, “it is clear that we will provide cash as long as citizens want it to.”

Libra has the potential to become a dominant player

Tech giants have also joined in, with Facebook planning to launch its stablecoin Libra this year. However, it has raised the hackles of regulators around the world. Weidmann said,

“Facebook is planning a digital form of payment, tied to a basket of multiple currencies such as the euro and the US dollar. This creates an exchange rate risk for the users. We have stable money with the euro that has proven itself over the past decades.”

Moreover, according to him, such a currency has “greater potential” in countries such as emerging markets where their official currency is weak and the payment infrastructure is not well developed.

But the fact that the social media giant has more than two billion users, it has such a strong impact that Weidmann says, “would give Libra the potential to become a dominant player right from the start.”

However, one of the criticisms thrown at Libra is that it threatens to create a private monopoly. To prevent that, regulators want the digital currency to follow regulations that prevent money laundering and terrorist financing.

Weidmann also wants banks to counter Facebook by focusing on speed, ease of use, low costs, and security.

Read Original/a>
Author: AnTy

Despite A 2020 Launch, Facebook’s Libra Has No Solid Strategy To Be Rolled Out

According to a member of the board responsible to oversee the Libra project, a solid strategy is yet to be developed on how and where the Libra cryptocurrency will be launched in the coming year, Reuters reports.

Patrick Ellis who is a board member of the Libra Association which is tasked to issue as well as govern the operations of the virtual currency, revealed that the launching of the Libra crypto, anticipated to be in June, will depend on the outcome of the negotiations with the regulators.

Ellis stated that currently there was no set strategy either for the markets as well as the cryptocurrency itself on how it will be launched.

The Libra project has rattled the financial regulators and authorities from across the world due to the prospect that it could be used by Facebook’s 2.4 billion users. The authorities are nervous that it has the capacity to change the world’s financial landscape.

The Libra project which is led by Facebook among other notable firms was unveiled in June this year. Since its inception, the project has faced numerous challenges from policy makers across the world which could lead to a delay in its launching.

Ellis stated that it was still too early for the board to come up with an elaborate strategy as they still have lots of issues to work out with the regulators before they can come up with a fine launching strategy.

The Libra project has faced various hurdles led by the US Congress who are questioning how the users data will be handled and whether it will be safe following the recent controversies that have rocked Facebook. The Congress has urged for a halt of the project until all the raised issues are resolved conclusively. On Wednesday Lael Brainard, Fed Governor, added the latest voice against the project stating that it was facing crucial legal as well as regulatory challenges. Brainard also stated that the concept of the stablecoin is still unclear and unproven.

Read Original/a>
Author: Joseph Kibe

Libra Whitepaper Gets Updated, Association Members Won’t Get Paid On Reserve Asset Profits

  • The new whitepaper doesn’t use interest to pay early investors, which are predominantly involved in the Libra Association.
  • The interest will still go towards operational costs, keeping transaction fees low, and further development.

Ever since the Libra Association released their whitepaper for their crypto asset (Libra), there have been many regulators pushing for change. Reports by CoinTelegraph shed light on a recent article by Chris Brummer, a law professor at Georgetown University, discussing the new changes that the whitepaper has gone through. Apart from the amendments that were expected with the new list of members, the Libra whitepaper also removed the dividends that were meant to be paid out to early investors in the project.

The original whitepaper for Libra, published in June 2019, stated that the interest accrued for the reserve assets would be used for multiple purposes, including the coverage of system costs, and supporting growth. One of the other uses for the interest was meant to be used towards paying dividends to Libra Association members as the earliest investors in the project. However, the revision has created the following change:

“Interest on the reserve assets will be used to cover the costs of the system, ensure low transaction fees, and support further growth and adoption.”

Brummer stated that the possible reach for the change is that, by awarding dividends to early investors, there’s the possibility of a conflict of interest with the Libra Association members and the currency’s end-users. The reserve assets need to be stable to promote the update of the Libra token, and paying out dividends would put the reserve at risk with other assets. Trust would be reduced or lost entirely, resulting in a lack of uptake for the asset, since the stablecoins rand to lose their value.

Another potential reason for the changes is to address the worries that Libra and other stablecoins could end up being defined as a security, which is the hope of two lawmakers. Still, Brummer remarked that this new definition won’t likely happen, since stablecoins generally keep the same value.

Read Original/a>
Author: Krystle M

Bison Trails Blockchain Protocol, a Libra Association Member, Secures $25.5 Million in Funding

Bison Trails, a member of The Libra Foundation and blockchain protocol provider, raised $25.5 million in Series A funding.

The round was led by the venture company Blockchain Capital. Other companies that participated in the funding round were Coinbase Ventures, ConsenSys, Kleiner Perkins, A Capital, Sound Ventures and Collaborative Fund.

Bison Trails Raises $25.5 Million

The company was able to secure $25.5 million in order to expand its current blockchain infrastructure offerings for clients. The firm decided not to share further financial terms of this deal.

The Facebook Libra Association was created by Facebook and other financial technology companies around the world in order to be part of the new Libra cryptocurrency ecosystem.

The startup is currently helping customers deploy nodes on different blockchain networks without having to create their own infrastructure and protocol engineering competencies.

Many firms are already entering the blockchain market and there is a higher demand for services related to the industry. Companies such as Bison Trails are expected to play a more prominent role in helping the sector expand.

According to the CEO of the company Joe Lallouz, the firm will contribute to building the new system with Facebook.

Although there is a large interest in the new crypto asset Libra, which is planned to be launched in 2020, regulators around the world have already warned about the effects this cryptocurrency could have in the world economy. At the time of writing this article, the firm is helping more than 20 different protocol projects handle their blockchain initiatives.

In this way, the firms do not have to invest financial resources and time in setting up specific in-house security and infrastructure for their distributed ledger technology (DLT) projects.

Until now, the firm’s total funding surpassed $31 million. Although in the future they could raise more funds, the company didn’t provide information about it.

Read Original/a>
Author: Carl T

Despite Regulatory Impediments, Facebook’s Libra Proclaims It Is “Growing Strong”

  • Many countries around the world are looking to block the launch of the Libra cryptocurrency.
  • TechCrunch’s critical article on the recent Libra summit inspired a statement to be released by the project.

The announcement of Facebook’s upcoming digital asset, Libra, has come with its fair amount of controversy and upset across the globe. Even while some countries are refusing to allow for its use at all, the Libra Association doesn’t appear to be the least bit bothered. In fact, in a post regarding the technical infrastructure, it states that Libra is “5 months and growing strong,” completely ignoring the backlash.

Libra recently launched its blockchain testnet, which has already performed 51,000 mock transactions through the last two months. There have already been 40 wallets, tools, and block explorers that are built on the blockchain testnet, as well as 1,700 GitHub commits. Coinbase, Uber, BisonTrails, Iliad, Xapo, Anchorage, and Facebook’s Calibra are presently running Libra nodes to process transactions. There are still six more nodes that the company aims to establish, and eight more to be set up by members.

Despite the update on the backend of Libra, there still seems to be a lack of plan to reach the goal of 100 members and nodes by next year, considering that there are presently only 21 members with nodes. After all, the launch is next year, and there’s still many regulators in the US and globally that won’t allow this to happen, which isn’t addressed at all.

Facebook is mostly focusing on fintech at the moment, since it isn’t dealing with any of the concerns about Libra. The platform launched Facebook Pay this week, allowing members of their Facebook Messenger, WhatsApp, and Instagram platforms to use a single payment method for paying merchants, friends, and charities. The new payment system could push for users to make more purchases on the platform, giving them a better idea of the transactions occurring on the platform while attracting merchants to spend more on their advertisements. Apart from financial inclusion, these goals are primarily what Facebook was trying to establish with their new cryptocurrency.

Many of the concerns from lawmakers stem from the way that Libra could potentially be a way for criminals to launder money, putting users’ assets at risk. It also puts a lot of power in the hands of Facebook, especially considering the ongoing antitrust investigations.

While the announcements from Libra could’ve been an opportunity to show how the project aims to deal with fraud and security issues, the Libra Association instead chose to talk code. Fixing policy was left off and almost completely ignored. Though TechCrunch submitted questions to the Libra Association for further clarification, a response was not provided before their article was published.

However, a later update of this article showed that a spokesperson from Libra responded to the criticism. The statement from the spokesperson explained that the Libra Core Summit was created as an effort to support members and educate them, regarding how to run a Libra node, build a Libra wallet, and more.

The spokesperson, Michael Engle, added,

“For those organizations without a technical team to implement a node, the Libra Association is working on a strategy to support deployment in 2020, when the Libra Core feature set is complete. The Libra Association intends to deploy 100 nodes on the mainnet, representing a mix of on-premises and cloud-hosted infrastructure.”

Read Original/a>
Author: Krystle M