KANALCOIN NEWS – The Libra Association has published an updated whitepaper for the Libra stablecoin project, which was originally announced by social media giant Facebook in June last year. Michael Engle, a developer at the Libra Association, explained some of the key changes in a blog post last Thursday.
Since the project was announced, “we have worked closely with regulators, central bankers, elected officials and various stakeholders to shape innovative approaches to using blockchain technology to support licensed and regulated payment systems,” said Engle, adding:
“We have made changes to our initial approach, many of which depart from approaches taken by other blockchain projects.”
Facebook Stablecoin New Whitepaper
The new official Libra report mentions that four key changes have been made to address regulatory issues that deserve special attention.
The first is to offer single-currency stocks in addition to multi-currency coins. And the second is about increasing the security of the Libra payment system with a strong compliance framework.
The other two areas are continuing the future transition to a permissionless system while retaining its key economic properties and building strong safeguards into the Libra Reserve design. Full details of the changes to the Libra project are outlined in a new whitepaper.
Many regulators worry that the planned Libra cryptocurrency could disrupt their country’s national currency and monetary policy if it reaches sufficient scale, such as that used by Facebook’s 2.5 billion users.
To address these concerns, Engle explains:
“We are augmenting the Libra network by including single currency stablecoins (i.e. USD, EUR, GBP, etc.).”
Instead of using an existing stablecoin, such as tether (USDT), the Libra single-country stablecoin is self-issued, and the Libra coin (LBR) will be separate from them.
Initially, the Libra stablecoin will be the currency that makes up the proposed LBR basket, such as Librausd (USD), Libraeur (EUR), Libragbp (GBP), and Librasgd (SGD).
“We look forward to working with regulators, central banks and financial institutions around the world to increase the number of single-currency stablecoins available on the Libra network,” wrote the Libra Association.
The new plan “will allow people and businesses in regions whose local currency holds a single-currency stablecoin on the Libra network to directly access stablecoins in their currency,” the new whitepaper adds.
“Each single-currency stablecoin will be fully backed by Reserves, which will consist of cash or cash equivalents and short-term government securities denominated in that currency.”
The New Libra StableCoin
The design of the Libra coin (LBR) has also been changed. The new whitepaper explains that the new Libra coin will not be a separate digital asset from the single currency stablecoin, it adds:
“Under this change, LBR will only be a digital composite of the several single-currency stablecoins available on the Libra network.”
“It will be defined in terms of a fixed nominal weight, such as Special Drawing Rights (SDRs) administered by the International Monetary Fund (IMF),” the white paper notes, adding that this approach provides “a clear path to integrate central banks without digital currency barriers ( CBDC) when available.”
In addition, the Reserve “will hold assets with short-term maturities, low credit risk and high liquidity. It will also maintain a capital buffer.”
License and Launch
The Libra Association also announced on Thursday that it had started the formal payment system licensing process with the Swiss Financial Market Supervisory Authority (FINMA), the Swiss financial regulator.
According to reports, the association is also planning to register with the US Financial Crimes Enforcement Network (FinCEN) as a money services business.
In building the Libra system, the association has incorporated feedback from regulators. Amid regulatory scrutiny, several Libra advocates have left the project, including Visa, Mastercard, Paypal, Vodafone, and Shopify.
Several backers now also support a competing project, Celo. This week, the G20 discussed setting rules for the regulation of other stablecoins, including Libra.
The planned launch date for the Libra project was originally set for the end of June. However, Dante Disparte, the Libra Association’s head of policy and communications, told the media that now the aim is to launch the project between mid-November and the end of the year. We’ll just have to wait and see how it develops, the possibility of a new future coming to the financial industry.