Social media company Facebook is trying to impress regulators with changes to its cryptocurrency offering-Libra. The company is planning to launch multiple stablecoins instead of just one global cryptocurrency.
Making changes to the white paper
Facebook has been facing regulatory criticism from around the world ever since it announced the Libra crypto coin last year. Now, the company has updated the whitepaper on libra.org, the official website of the project. The amendments were approved by members of the Libra Association.
Though the whitepaper has several changes, the biggest one is their approach to bringing a single cryptocurrency to the world. According to the amendments, the Association will now focus on creating multiple stablecoins, instead of launching one coin for the entire world. The members of the Libra Association are redesigning their proposed digital currency so that it does not compete with sovereign currencies or interfere with the monetary policy of a nation.
The project will begin with four stablecoins pegged individually to cornices that were earlier considered to be a part of the LBR basket. This means a LibraUSD coin, a LibraEUR coin, a LibraGBP coin, and a LibraSGD coin will come into existence. Each of these currencies will be backed by reserves of cash or cash equivalents and government securities of the fiat pegged to coin.
An effort to woo regulators
Regulators have been unhappy with Facebook’s approach and some have even called out the company’s ambition to run a global financial system that could threaten the existing financial markets. Libra was originally planned as a single stablecoin backed by fiat that could be used to send money anywhere with ease.
However, the new Libra design doesn’t make it any better than other payment networks like PayPal. Several fintech firms already operate in this sector and provide support for multiple coins and currencies which can be used for making transfers around the globe. Yoni Assia, co-founder and CEO of eToro commented, “The main downside of these changes is that the system is less open and less decentralized, therefore the bitcoin community will probably disregard this as another centralized project.”
The Libra Association hopes that the new approach will support a wider range of domestic use cases and provide a clearer path for CBDC integration. The project will also get a better compliance framework, building robust protections for the Libra Reserve and forgoing the transition to a permissionless system.
