For many cryptoasset fans, it was like Christmas in June.
Facebook released the long-awaited white paper for its stablecoin Libra on the 18th of June. While plenty of digital ink has already been spilled both castigating and adulating the tech giants’ first major foray into digital assets, we wanted to provide our first glance takeaways on some of Libra’s key features:
- Impressive Corporate Partners
As it stands, Facebook’s currency is set to launch with an impressive list of partners including Visa, Mastercard, Uber, Lyft, Ebay, PayPal, Coinbase, and Spotify. Each partner will reportedly pony up $10M for the right to join an association to maintain and govern the cryptocurrency. Beyond Facebook’s big foray into the market, the impressive array of potential partners serves as an implicit endorsement for the crypto industry writ large.
- Permissioned Blockchain (For Now)
Unlike Bitcoin, only founding members will have the ability to maintain Libra’s blockchain. While the white paper outlines plans to eventually transition to a permissionless blockchain, many diehard libertarian cryptoasset fans are wary of the potential for censorship and rewinding payments in certain cases. Of course, Libra’s target market may not ultimately care about the nuts and bolts of the underlying protocol, as long as they can make purchases and store wealth in a relatively safe and stable way.
- Regulatory Scrutiny is Inevitable
Already, lawmakers in major developed nations including the US, Germany, France and Japan have expressed skepticism toward Libra. In recent comments to US lawmakers, Libra’s co-creator David Marcus stated, “We know we need to take the time to get this right. Facebook will not offer the Libra digital currency until we have fully addressed regulatory concerns and received appropriate approvals.”
This collaborative approach to developing appropriate regulations will be essential; unlike many ICOs that launched into a regulatory “grey area” over the past few years, Libra will require massive scale and adoption to succeed, and given Libra’s stated intention to “empower billions of people,” policymakers need to buy in. Facebook’s reputation for protecting (and not exploiting) user data is hardly reassuring, so regulators are understandably skeptical!
Ultimately, Libra may have to fight court battles in dozens of countries across the globe, likely delaying the targeted early 2020 global launch date for the cryptocurrency. At this point, we expect to see a “phased rollout” of the cryptocurrency in the coming years, starting in countries with less developed regulatory frameworks.
- Potential to Introduce Billions to Crypto
While there will be plenty of headwinds, Libra has the potential to be a massive long-term bullish catalyst for crypto market as a whole. It’s not hyperbole to say that Libra could familiarize billions of people with digital wallets and non-sovereign virtual currencies in the next decade. While it remains to be seen whether global users, vendors, and regulators will ultimately give Libra their collective seal of approval, the best case scenario has crypto bulls’ mouths watering already!