The week in review: Facebook’s Libra rebrands ahead of rumoured launch
Facebook’s Libra project seized the day earlier this week as it announced a rebrand to its new name: Diem. In other news, a proposed congressional bill is seeking to regulate stablecoins and BlackRock’s CEO has had a change of heart. Is the asset manager set to go all in?
Kick back, relax and soak up this week’s biggest crypto headlines.
Facebook’s Libra pivots to “Diem”
Since its inception in 2018, Facebook’s crypto project Libra has faced a number of regulatory hurdles and undergone several incarnations. And here’s another – what was once Libra has now been rebranded to “Diem”, as they attempt to gain regulatory approval by highlighting the project’s independence.
Stuart Levey, CEO of the Geneva-based Diem Association told Reuters on Tuesday the project’s name switch is part of a move to showcase a simpler, revamped structure. “The original name was tied to an early iteration of the project that received a difficult reception from regulators. We have dramatically changed that proposition.”
Diem, which translates to “day” in Latin, has clarified its plans to launch a single dollar-backed digital coin. While we’re still unclear on an intended launch date, the Financial Times reported last week we could see the digital project out in the wild as early as January next year.
Facebook, which also changed the name of its payments unit Calibra to Novi Financial in May, remains one of 27 Diem Association members. Levey called Facebook “a critically important member of the association” and said “We are not trying to cut all ties, by any stretch. It (the name change) is to signify that the association is operating autonomously and independently.”
To curb regulatory scrutiny, the project said it would develop policies on anti-money laundering, terrorist financing and sanctions compliance, as well as tightening membership requirements.
New congressional bill looks to regulate stablecoins
A new proposed bill to regulate stablecoins has received a mixed response from the crypto community. Spearheaded by Congresswomen Rashida Tlaib, as well as Rep. Jesús “Chuy” García and Rep. Stephen Lynch, the Stablecoin Tethering and Bank Licensing Enforcement (STABLE) Act has a series of hefty requirements for stablecoin issuers.
These include having a banking charter and regulatory approval from the Federal Reserve, the FDIC, and other agencies before issuing coins. They must also be FDIC-issued or maintain an equivalent number of dollars at the Federal Reserve. Yikes.
The bill appears to take direct aim at stablecoin companies like Tether, as well as Facebook’s Diem Association. Tlaib said the bill’s purpose was to protect lower- and moderate-income consumers who have no access to adequate banking services. The lawmakers are pushing for increased regulation so as to prevent crypto companies from adopting the negative marginalising habits of their more-traditional counterparts, and to avoid the creation of a shadow banking system.
While its intentions may be benevolent, critics are pointing out the bill may have some adverse effects.
this has the OPPOSITE effect
cryptocurrencies LOWER the cost of servicing populations that have historically been excluded from the banking sector. raising costs and compliance obligations forces companies to cut access for unprofitable clientele.
please, no more clowning ? https://t.co/IbjqXJpT4F
— Meltem Demirors (@Melt_Dem) December 2, 2020
1/8 The STABLE Act would represent a huge step backwards for digital currency innovation in the United States, limiting the accelerating progress of both the blockchain and fintech industry.
— Jeremy Allaire (@jerallaire) December 2, 2020
What do you make of it? Let us know on Twitter.
Visa looks to integrate Circle USD Coin
On Wednesday, Visa announced both a partnership with Circle Internet Financial and plans to integrate Circle’s dollar-backed stablecoin, USDC.
Stablecoins have enjoyed popularity this year as a viable on-ramp to the wider crypto space, in part thanks to the growing DeFi movement. While Visa itself won’t custody any USDC, Circle will be working with the payments giant to help certain Visa card issuers integrate USDC software into their platforms to allow for the sending and receiving of USDC payments.
Looking to the future, it hopes to offer a corporate card allowing users to spend USDC. “This will be the first, corporate card that will allow businesses to be able to spend a balance of USDC,” said Cuy Sheffield, head of crypto at Visa, adding that, “We think that this will significantly increase the utility that USDC can have for Circle’s business clients.”
Circle spokesperson Josh Hawkins confirmed the move, saying the companies were looking at a 2021 launch. Visa’s current rules require that cards in the US are formally issued by a bank, meaning Circle will have to partner up with one in order to launch.
BlackRock and PayPal CEOs weigh in on Bitcoin’s growing legitimacy
Laurence Fink, CEO of investment management firm BlackRock spoke about Bitcoin in a panel discussion on Tuesday with former Governor of the Bank of England Mark Carney, citing the cryptocurrency’s increasing legitimacy as an asset class.
He noted that growing interest could indicate it will eventually have a place in the global financial system. The news is especially bullish considering Fink’s previously sceptical views around the cryptocurrency. On Tuesday, however, he said BlackRock had seen a significant rise in interest in bitcoin through BlackRock’s search function.
He did mention it’s still a “thin market” that remains untested, and that its future will depend on its ability to scale. Both Carney and Fink expressed the view that digital currencies are an opportunity to bring down costs of payments and believe they may have a “real impact” on the US dollar as a reserve.
Separately, in an interview with The New York Times columnist Andrew Ross-Sorkin at the ongoing Web Summit in Portugal, PayPal CEO Dan Schulman said COVID-19 was accelerating the global adoption for cryptocurrencies for digital payments. Commenting on their potential to go mainstream, Schulman said:
“I think that if you can create a financial system, a new and modern technology that is faster, that is less expensive, more efficient, that’s good for bringing more people into the system, for inclusion, to help drive down costs, to help drive financial health for so many people […] So, over the long run, I’m very bullish on digital currencies of all kinds.”
His comments come off the back of PayPal’s recent dip into the crypto pool.
Bank of Canada rethinks CBDC timeline
Could Canada be readying for a new digital currency of its own? Back in February, Timothy Lane, a deputy governor of the Bank of Canada said the nation had no need for a state-backed digital currency, but that it would develop one anyway should its need become more apparent. As it turns out, that need could be coming sooner than the Bank expected.
At the February conference, Lane outlined two scenarios that could prompt the Canadian government to issue the CBDC they’d been workshopping. In short, the first dealt with physical cash being phased out of Canadian society and the second involved cryptocurrencies becoming so popular that they could potentially threaten Canada’s sovereign currency.
In a more recent interview, however, Lane said the first precondition could happen sooner than he initially anticipated. “In February, we identified two scenarios that we would want to be prepared for,” he told the Centre for International Governance Innovation, a Canadian think tank. “I would say that in the last nine months we’ve seen developments that look like they’re in the direction of some of those things coming to pass sooner than expected.”
The comments suggest the Bank is taking a closer look at the CBDC plan they put forward in February, with Lane commenting “[…] it’s more urgent for us to make sure that we’re ready if we have to be ready. So, our work definitely has to move forward.”