CFTC Chairman: Facebook's Crypto Project Design Is 'Very Clever', But Only in Early Stages

Social media giant Facebook has been discussing the details regarding the development of its stablecoin  - GlobalCoin - with the U.S. Commodity and Futures Trading Commission (CFTC).

CFTC Chairman Christopher Giancarlo revealed that the US federal regulator has held “very early stages of conversations” with Facebook’s management. According to Giancarlo, the recent discussions with the social media giant have been centered around gaining a better understanding of what type of cryptoasset Facebook intends to release.

Does Facebook’s Stablecoin Fall Under CFTC’s Remit?

According to the Financial Times, the CFTC is looking to determine whether Facebook’s stablecoin would be considered a traditional financial instrument (and regulated as such) under the current regulatory framework.

Commenting on the matter, Giancarlo said the CFTC was “very interested” in gaining a better understanding of the new cryptocurrency and that the regulator would strictly “act on an application.” He also clarified that Facebook had not provided any details (in writing) to the CFTC regarding the upcoming launch of GlobalCoin.

Mainly Used For Cross-Border Transfers and Online Payments

Notably, Facebook’s management has also held discussions recently with other government agencies and officials in the U.S. and the U.K.. The conversations have reportedly been focused on the social media company’s plans to introduce GlobalCoin, a distributed ledger technology (DLT)-enabled stablecoin.

As confirmed by Facebook in previous reports, the firm’s new crypto token will mainly be used to make cross-border payments and settle e-commerce transactions. The social media giant’s cryptocurrency is also part of its blockchain-focused initiative, called Project Libra.

Facebook Reportedly Seeking $1 Billion in Investments for Crypto Project

While it’s too early to categorize Facebook’s GlobalCoin as a particular type of financial instrument that would be regulated by the CFTC, Giancarlo noted that if the social media giant’s stablecoin is backed by the USD, then it might not be necessary to tie the coin to derivatives.

Acknowledging that the overall design of Facebook’s latest stablecoin initiative is “very clever”, Giancarlo also mentioned in the report that the main compliance issues the project may face would be centered around whether there would be appropriate know-your-customer (KYC) / anti-money laundering (AML) checks.

In early April 2019, Nathaniel Popper, the author of Digital Gold, one of the most popular books on bitcoin (BTC), revealed that Facebook was planning to raise $1 billion for its cryptocurrency project. Popper, a New York Times reporter and Harvard University graduate, also noted in April that “one of the biggest allures of blockchain projects is the decentralization.”

Although Facebook might not need to conduct a fundraising campaign, as it has around $100 billion in total assets and $84 billion in equity, analysts have argued that the firm’s management may be planning to work with outside investors in order to make its crypto project look “more decentralized and less controlled” by the company itself.

Quantitative Bitcoin Analyst PlanB Explains Why His Identity Remains a Secret

Michael LaVere
  • Quantitative crypto analyst PlanB keeps his identity a secret to avoid interfering with his employment at an institutional investor.
  • PlanB gained prominence for being the first analyst to apply the stock-to-flow (S2F) model to bitcoin. 

The anonymous crypto analyst PlanB has revealed why he keeps his identity a mystery. 

PlanB, who gained prominence on Twitter and Medium for being the first analyst to apply the stock-to-flow (S2F) model to bitcoin, said he keeps his true identity a secret in order to avoid interfering with his day job. 

Speaking in an interview with In Gold We Trust, the quantitative analyst said, 

I am both an analyst and investor at an investment office of a large institutional investor in the Netherlands. As a team we invest USD 50+ billion AUM. My main focus is on mortgages, loans, and structured finance. I do not want my employer to have any negative consequences from my Bitcoin ‘hobby’. Also, I consider it good operational security to remain anonymous.

PlanB continued, explaining he has no interest in becoming a public figure and does not intend to reveal his identity any time soon. 

He also refuted several criticisms against the application of stock-to-flow to bitcoin, which evaluates the injection of new BTC into the market relative to the total circulating supply. 

He said, 

People that use the demand argument probably don’t have a statistics or investing background. The argument is theoretically right (price is a function of supply and demand) but there are a lot of famous pricing models that do not use demand – or supply – as input and still give good predictions.

PlanB said strict adherence to the overall demand for bitcoin, which does not apply in S2F, is an argument based on “ignorance.”

Featured Image Credit: Photo via Pixabay.com