Libra launches or encounters resistance again
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Founding member of the Libra Association "withdrawal storm"
Since October 2019, Libra founding members eBay, PayPal, Visa, MasterCard, Stripe, and Mercado Pago have successively announced their withdrawal from the Libra Association. Of course, we can find that the above exiting members are all payment service institutions. For Libra, whose mission is to create and "build a simple, borderless currency and financial infrastructure serving billions of people", the first payment It is one of its most important basic functions. And Libra has lost the support of many payment companies one after another, which may deal a serious blow to the project first.
So why are these payment institutions withdrawing from the Libra Association? Russell Brandom, policy editor-in-chief of The Verge, believes that traditional payment service providers are regulated and also need to meet the requirements of specific regulations such as fraud, money laundering, and sanctions enforcement. As governments of various countries begin to realize that Libra is difficult to meet these regulatory constraints, this means that if payment service providers choose to cooperate with Libra, they may eventually face difficulties, and their core business may be completely destroyed by regulatory actions.
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Libra rivals increase
Libra wants to issue a currency that can circulate around the world, which is equivalent to challenging the status of legal currency issued by central banks around the world, and it will also have a huge impact on the global financial system and people's daily payment methods. This undoubtedly sounded the alarm for the vested interests of the old system and the central banks of various countries.
It has attracted the attention of major Internet giants and other giants to cryptocurrencies. It is reported that on August 1, 2019, the US Patent and Trademark Office disclosed in the document that the retail giant Wal-Mart is applying for a digital encryption currency patent. Tencent, one of my country's BAT giants, also issued an internal notice on December 23, 2019, stating that it will set up a digital currency research project team and so on.
central bank digital currency CBDCcentral bank digital currency CBDCactive research and development. In the future, CBDC must also be a strong enemy of Libra and other cryptocurrencies. As Litecoin founder Li Qiwei said: "Cryptocurrency may be worth billions of dollars, but if people don't use it like fiat currency, what's the point? To me, the important thing is value storage and pay."
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Libra Association seems to hesitate in KYC and anti-money laundering work
Recently, Mastercard CEO Ajay Banga, who withdrew from the Libra Association in October last year, talked about withdrawing from the Libra Association in an interview with the Financial Times. Banga said the main members of the Libra Association do not commit to "not doing anything that is not fully compliant with local laws."
When talking about the reasons for withdrawal, Banga said that Mastercard must conduct due diligence through KYC, anti-money laundering and data management, but Libra seems to be hesitant in these aspects. Banga explained: "Every time I talk to Libra's main supporters, I ask if I can write these down, but they didn't do it." From Banga's answer, we may know why Libra even went through the hearing. The reason why it was still unable to be released after heavy supervision by the government and the government. As Banga said, the main members of the Libra Association are not committed to "not doing anything that is not fully compliant with local laws."
This is completely unacceptable to the positions and attitudes of central banks in anti-money laundering. The so-called KYC policy mentioned in the subtitle of this paragraph refers to the enhanced review of account holders, which is the institutional basis for anti-money laundering to prevent corruption, and to understand the legitimacy of the source of funds. The KYC policy not only requires financial institutions to implement the account real-name system to understand the actual controller of the account and the actual beneficiary of the transaction, but also requires a full understanding of the customer's identity, permanent residence address or the business the company is engaged in, and take corresponding measures.
Although at previous hearings, Zuckerberg stated that he would actively cooperate with regulators to make Libra comply with anti-money laundering and anti-terrorism regulatory standards. However, its response does not seem to be reassuring and satisfactory to the regulators, so it has been unable to pass the review and approval. And not long ago at the 2020 Silicon Valley Technology Summit, Zuckerberg said in a speech that Facebook will stick to its principles in the two fields of strong encryption and freedom of speech, regardless of whether it will anger many people. Some analysts said that this position may jeopardize the smooth launch of Facebook's digital currency Libra.
To sum up the above reasons, we know that the launch of Libra in 2020 will not be very smooth. Even if it can be launched as scheduled, whether it can be circulated and used among countries depends on the attitudes of governments and central banks towards Libra. At least according to the current situation, the acceptance of Libra by various countries does not seem to be very high.
As Dante Disparte, vice chairman of the Libra Association, said in an interview, Libra needs to complete three things before it can be launched. First, the governance structure and independence of the association must be established; the second job is that the technical layer must be robust and resilient, and capable of running and supporting all generations of payment systems that need to support dozens of billion people; the third task is overcoming regulatory and political hurdles.
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