Active change, Libra or USD single anchor

The Block was informed that the Libra Association is considering a major adjustment to the asset support model of its stablecoin.

Facebook officially released the Libra white paper last June. In the white paper, Libra's value is described as pegged to a basket of fiat currencies and other assets. Two sources familiar with Libra's progress said that the Libra Association is considering whether to abandon the proposed "basket of fiat currencies + other assets" model and adopt a "pure dollar" support model.

The new model is believed to help ease concerns among U.S. regulators and lawmakers, as some regulators believe that Facebook's stablecoin plan is posing a "direct threat."

In fact, concerns about Libra have haunted Washington since last summer. Capitol Hill has held a number of hearings, and David Marcus, the head of the Facebook blockchain, and Zuckerberg himself have attended. Washington insiders told The Block that those concerns have not abated since then.

The reporter contacted an official spokesperson for the Libra Association, but declined to comment on the rumors.

In addition, a report by German media FinanceFWD at the end of January stated that the Libra Association may be considering issuing multiple currencies, each supported by a specific single fiat currency, including the euro. The report also noted that several European regulators are engaging with members of the Libra Association on the plan.

"Gratifying change"

"I think this is a welcome change," said Kristin Smith, the head of the Blockchain Association dedicated to promoting blockchain technology. "The main concern among lawmakers is that Libra could weaken the dollar ’s position, So if Libra really switches to being supported by the US dollar alone, many worries can be resolved. "

In fact, this shift may indeed make sense.

Zuckerberg has said that Facebook may withdraw from the association without the necessary regulatory approvals. A draft law has now become a potential obstacle to Libra. "The Stablecoins Are Securities Act of 2019" is a direct response from opposition lawmakers to Libra. The draft proposes to treat "managed stablecoins" as "investment contracts", which in turn constitute securities as defined in section 2 (a) of the Securities Act of 1933.

Although Facebook does not describe Libra as a "managed" stablecoin, the white paper describes reserve assets designed to support the value of Libra as a basket of bonds, currencies, and government securities, which it claims will help maintain Libra's price stable.

Facebook also appears to have removed certain aspects of the token structure from the white paper, including paying dividends to member companies through reserve assets, and providing member companies with free investment tokens. In short, this is a sign that Libra is not shy about tweaking its original design.

What is the impact on other USD stablecoins?

Although this change is still in the pipeline, its impact is still fascinating-will Libra's entry threaten other USD stablecoins?

People in an industry believe that Libra's entry may not pose a huge threat as people think. For example, two regulated stablecoin vendors, Paxos and Circle, have successfully opened their own markets, and Facebook has not hinted at exploring this area.

As far as Paxos is concerned, in addition to caring about how to increase the market share of PAX, it is also concerned about how to build its "Stablecoin as a Service (SAAS)" platform. The company's technology has already supported the stablecoins issued by Binance and Huobi, and is currently seeking cooperation with other companies in the financial services industry.

Paxos CEO Chad Cascarilla said in a statement: "We have seen the initial interest of mature multinational companies in blockchain. In 2020, we will see these companies explore the use cases of stablecoins in the blockchain. Greater efforts are being made in the field of chains. "However, the company declined to specify which companies are being negotiated with.

As one of the popular choices for digital asset trading, USDC also seems to have its own moat to block the threat that Libra may pose.

A cryptocurrency trader said: "Imagine that Facebook may take a commercial route and dominate the future. Other stablecoins will dominate the crypto world's transactions. USDC and Tether will grow with the crypto ecosystem because Facebook Will not be trusted. "