ECB Official: Libra Will Not Launch Without Addressing Oversight Concerns

Samuel Haig

Benoit Coeure, the chairman of the G7’s international working group on stablecoins and Libra, told Reuters that “a prolonged discussion” discussion between regulators and Facebook may be needed, with money laundering and price volatility among the concerns articulated by the former French economist.

The ECB board member emphasized that Facebook’s global reach means that it must ensure safety and security for its users, stating that Libra must “be safe, robust and resilient from day one.”

“It’s not a learning process: either it works or it doesn’t,” he added.

Regulators May Consider Adjusting Existing Laws to Oversee Libra

Coeure plainly stated that regulators will not allow Libra to launch without first having their concerns addressed, stating: 

Authorities are not going to let any such projects happen before we have answers to our questions and before we have the right regulatory framework

Chief among regulator’s concerns are questions regarding whether Facebook would be able to withstand a run on its reserves. Further, authorities fear that the pseudonymous nature of Libra’s original design may facilitate money laundering or the financing of terrorism.

However, Coeure noted that the discussions between Facebook regulators may authorities consider changing existing laws in order to cover Libra. Coeure stated: “Down the road we might find that there are gaps or inconsistencies that would require a prolonged discussion by regulators on how to do it differently.”

The ECB board member indicated that his G7 working group on stablecoins will continue to explore issues pertinent to Libra until the annual meeting of the International Monetary Fund (IMF) in October, during which the matter will be passed to the Financial Stability Board of global financial regulators for further investigation.

Coeure Fears Libra May Erode Monetary Sovereignty of States

Mr. Coeure articulated that projects such as Libra may undermine states’ monetary sovereignty, emphasizing the potentially problematic nature of private companies exercising significant influence over the monetary systems of various nations.

“Market discipline is useful but I wouldn’t see it as progress to shift monetary sovereignty from governments to private multinationals,” he said.

As part of a prepared testimony for the July 16th Senate hearing into Facebook, Calibra head David Marcus stressed that Facebook would not launch its virtual currency until the company has “fully addressed” the concerns of regulators.

Steemit Moves to Limit Justin Sun’s Influence after Its Acquisition

Justin Sun, the founder of TRON, has announced he was going to acquire Steemit earlier this month, and shortly after those currently running the Steem blockchain executed a soft fork to limit his voting influence.

In a blog post describing the move, Steem’s witnesses [similar to bitcoin miners or EOS block producers] detailed that while it’s exciting to see a well-resourced entity get involved with Steemit, the witnesses are now moving to ensure the security of the Steem blockchain. The blog post reads:

To this end, we have updated to a temporary protective protocol to maintain the status quo currently established in regards to Steemit Inc's stake and its intended usage.

Steem is a delegated proof-of-stake (DPoS) blockchain, similar to EOS, in which a small number of entities – the witnesses – work to protect the blockchain and represent the community. The soft fork was deemed necessary because Steemit owns a large amount of STEEM tokens that could be used to take over the blockchain.

Given Justin Sun’s move to acquire Steemit, it’s believed he now owns those tokens and could use them to move Steemit in a specific direction. The soft fork blocks STEEM held by specific accounts from voting on who governs the network and from participating in ways that could see it seize control.

While the tokens have always been there, when co-founder Ned Scott ran the platform the community was comfortable with his approach to governance. Justin Sun has responded to the soft fork with an open letter to the Steemit community, in which he explains some of his potential plans for the Steemit platform itself.

The post reads:

We have so much to work to do to make Steemit.com the power that it really can be. And there are many ways we can get it there, from bridging TRX, TRC10’s and TRC20’s into Communities to marketing and growing Steemit.com. From invitations and referrals to simpler and instant signups.

Sun added his plans would also include listing STEEM on other major cryptocurrency exchanges and attracting large influencers to the platform, which is a mix of Reddit and Medium. He added he is organizing a summit called STEEMit 2.0 Town Hall, where he’s inviting the top 50 witnesses to participate.

It’s worth noting the Steem blockchain has several decentralized applications built on top of it, with Steemit being the most influential one.

Featured image by Ludovic Charlet on Unsplash.