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Libra, which has received a regulatory "boycott", has recently changed its name to Diem, aiming to regain regulatory approval by emphasizing the independence of the project. Can Diem succeed this time? What impact will it have on the stablecoin market?
Renamed closer to supervision
Media sources pointed out on December 1 that the cryptocurrency Libra supported by Facebook has been renamed Diem, aiming to regain regulatory approval by emphasizing the independence of the project.
Stuart Levey, CEO of the Geneva-based Diem Association, said that the name change was to emphasize a simpler and more complete structure: "The original name was linked to an earlier version of the project, but the regulatory response to the project was not No. We have greatly changed this proposition."
In addition, Levey further explained that Diem means "day" in Latin, and now the goal of the project is to launch a single dollar-backed digital currency.
In the face of regulation, can the repeatedly compromised Libra be launched this time? Earlier, according to the British Financial Times, Facebook plans to issue the cryptocurrency Libra in a limited form as early as January next year.
Has been revised in many ways
In fact, since Libra was launched, there have been many changes and adjustments in the face of supervision.
On June 18, 2019, Facebook released the Libra white paper, but the project soon caused trouble to skeptical regulators around the world, and the development of Libra also encountered regulatory opposition.
On July 17, the US House of Representatives Financial Services Committee held a hearing on Facebook's virtual currency. On September 13, the French Ministry of Finance stated that France and Germany had agreed to boycott the Libra cryptocurrency owned by Facebook. On October 5, PayPal announced that it would give up participating in Facebook's cryptocurrency Libra. In October, the five EU countries, led by France, are joining forces to boycott Libra’s entry into the European market and are also preparing to ask Facebook to abandon the project.
In this case, the progress of Libra, a digital currency project led by Facebook, has been faltering. Not only that, due to the "suppression" of regulatory agencies, some early partners have also retreated and announced their departure from the Libra Association.
Under pressure from regulators, in addition to the proposed Libra token, Facebook has decided to provide its users with digital versions of government-backed currencies, including U.S. dollars and euros. At the same time, Facebook has scaled back its plans for the Libra global digital currency and will not use it in its own services for the time being. At the financial report conference at the end of January 2020, Facebook CEO Mark Zuckerberg said that the Libra project will be handled by the Libra Foundation and will be “separated” from Facebook. But Facebook will not give up its efforts in the payment field.
On April 16, 2020, the Libra Association released the White Paper 2.0. In the White Paper 2.0, four major changes were made to the design of the Libra payment system, actively moving closer to supervision.
In White Paper 2.0, four major changes have been made to the design of the Libra payment system, including:
1. In addition to mortgages based on a basket of legal currencies, Libra will also provide stablecoins based on a single legal currency mortgage;
2. Improve the security of the Libra payment system through a strong compliance framework;
3. While maintaining the main economic characteristics, abandon the transition plan from the alliance chain to the public chain system;
4. Establish strong protection measures for Libra's asset reserves.
With the current name change, Libra finally succumbed, and after deciding to issue a single currency stable currency, step by step, it moved closer to supervision and passed.
Stablecoin market influence geometry
With Libra’s active approach, the Financial Times previously reported that Facebook plans to issue cryptocurrency Libra in a limited form as early as January next year. If it can pass this time, what impact will it have on the stablecoin market that USDT dominates?
Jiang Zhuoer previously stated on Weibo that Libra USD will be able to easily defeat USDT's scale advantage. Once USDT usage begins to decline, the problem of insufficient Tether reserves will be exposed and a run will inevitably occur. One day in the future, I don't know how many people will lose their fortunes because of the USDT thunder.
OKEx Chief Strategy Officer Xu Kun previously pointed out in an interview with Golden Finance that Facebook’s global users and ecological resources are the core advantage of Libra compared to all stablecoins. However, if only USDT is compared, the compliance is also better. Strong. However, as Libra’s white paper has been revised several times, the economic model and governance model have been simplified. Although the implementation is stronger, many design highlights have been abandoned, and its specific timetable and Facebook’s support. All have to wait and see.
However, some voices pointed out that if Libra is launched, it may not be able to break the monopoly advantage of USDT. First of all, there are differences in the scenarios of the two. The former may focus more on actual payment scenarios and cross-border financial services, but it faces regulatory policy pressure and uncertainty. Even larger, it may continue to be opposed by central banks and blocked by policies. Exchanges and wallets may not be listed on Libra or can be listed on Libra, so they cannot form a competitive relationship with USDT. Before the legal currency deposit channel is truly opened, USDT will still A bridge between the most important cryptocurrency in the market and fiat currency.
I am still unsure how I should rate this rush through Facebook. Originally, the stable was supposed to be linked to many currencies, but now the entry is supposed to be done with USD only.
Let's see how it will look like after the launch and to what extent it will be adapted. As so often it is said to wait and see.
Posted Using LeoFinance Beta