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Facebook’s Libra May Cause Banks to Cut Financing to the Company

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Libra

Libra

Ever since the potential launch of Facebook’s Libra was announced by the social media behemoth, the company’s cryptocurrency project has lurched from one problem to the next. Regulators from different parts of the world had voiced their concerns about the Libra cryptocurrency, and even the President of the United States slammed Facebook in one of his famous tweets.

New Trouble?

In a new development, it has now emerged that if Facebook (NASDAQ:FB) does not take care of the regulatory issues with regards to Libra, then banks might refuse to provide services to the company.

There have been fears from central banks that Libra might try to become a replacement of fiat currency, and today, the CEO of a major bank spoke about the possibility of not providing banking services to Mark Zuckerberg’s company. Ralph Hamers, the Chief Executive Officer of ING, has stated that banks might consider that step if Facebook does not comply with all the regulatory issues. He stated that if the company does not comply with regulatory frameworks, then there is the risk of criminal activity. In such a situation, banks will probably have no other option but to pull the plug.

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Hamers said, “Then we can take measures and exit the client, or not accept the client, so those are discussions you would have to have.” As everyone knows, banks are bound by stringent regulatory frameworks, and it is highly unlikely that they are going to be able to do business with a company that enters the financial system without the proper checks.

It is an understandable degree of caution from ING, and it remains to be seen if more banks come up with such statements with regards to Libra. However, it should be reiterated that Facebook had earlier stated that it is going to launch the crypto token only after meeting all the regulatory requirements.

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Facebook Libra to Be Pegged to Multiple Currencies as Stablecoin

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Libra

Libra

One of the biggest disruptions to the crypto space this year has been the announcement of Libra from the tech giant Facebook (NASDAQ:FB) back in July. The white paper published by the company about its cryptocurrency resulted in a lot of chaos and eventually led to turmoil in the crypto market as lawmakers expressed their doubts about Libra quite vehemently.

Key Updates

The company was asked to clarify several aspects of the Libra project to United States senators. In a report by one of the leading business publications, the company told Senators yesterday that the token is going to be a form of stablecoin. Unlike a traditional cryptocurrency, it is going to be backed by an algorithm, a currency, or even a commodity.

According to reports, the currencies that are going to be used to back Libra are going to consist of major currencies. Some of the currencies that will be backing Facebook Libra are the Singapore Dollar, the United States Dollar, the Euro, and the Japanese Yen, among others. The inquiry was put in place by Mark Werner, the Democratic Senator from Virginia. The company apparently put forward the list of fiat currencies that are going to back up its cryptocurrency.

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That being said, Facebook did eventually clarify that the final list of currencies that are going to back Libra is going to be finalized by the Libra Association. The Libra Association is made up of a range of entities and companies that are part of the entire project. That being said, the company went on to state that the digital currency is only going to be offered in regions after all regulatory concerns with regards to the digital currency have been cleared. It went on to state that Libra will only be offered after appropriate permission has been awarded by those in charge of the region.

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Bitcoin Could Rebound if Facebook’s Libra Hearing Goes Well

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Bitcoin

Bitcoin

2019 has been an excellent year for Bitcoin (BTC) after the poor year in 2018 had instigated many to write off the cryptocurrency, and by extension, the crypto space altogether. The cryptocurrency went on a highly impressive run this year and almost replicated the sort of rally that it had enjoyed back in 2017.

However, the past few weeks have not been particularly great for a variety of reasons, but the biggest issue is the one related to Facebook’s cryptocurrency Libra. The company’s plans to launch its own cryptocurrency at some point next year was initially welcomed by the crypto space, but since then, things have not quite worked as well as one would have thought.

Libra Faces Criticism

Over the past week, Libra has come under attacks from some of the most influential figures in the global financial elite, and that has resulted in sustained bear tendencies in the market. The price of Bitcoin dropped as well, along with the prices of all the altcoins. Jerome Powell, the head of the Federal Reserve, spoke about his reservations about it and so did the United States President, Donald Trump. Bitcoin has fallen from its highs of $13,000 to levels below $10,000 today, and experts believe that the rise in price is going to be tied to Facebook’s Congress hearings that are going to end on Wednesday.

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It has been revealed that on Wednesday, David Marcus, the head of the Libra project at Facebook, is going to be grilled by the Senate Banking Committee on Tuesday, and the following day, he will need to field questions from the House Financial Services Committee. Experts believe that the doubts and uncertainties over the future of Libra are weighing heavily on the price of Bitcoin. If Facebook’s cryptocurrency manages to come out of these hearings without a lot of damage, then there is hope that Bitcoin could rise in price again.

At the time of writing, Bitcoin is looking very weak and now down 11% at $9,680.

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Libra Should Not Scare Central Banks, Says Facebook

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Libra

Libra

Libra, the cryptocurrency that is expected to be launched by Facebook (NASDAQ:FB) in 2020, has proven to be the biggest disruptor in the crypto sphere since June. Policymakers, central bankers, and even politicians have expressed their skepticism with regards to the project.

Relief for Crypto Traders?

The announcement in July created massive disruption in the crypto market, and it was around that time that Bitcoin lost its momentum. That being said, the troubles for Libra are not over yet as fresh fears have been raised whether the Facebook-backed stablecoin is going to undermine the US Dollar and other sovereign currencies or not. Due to this development, Facebook has again been pushed on to the back foot.

Some of the concerns in addition to its effect on traditional fiat currencies include data privacy issues of users and the fact that the token could be used for criminal activities. Considering the fact that the company has been in the middle of a data privacy storm for some time, it is only natural that regulators believe that Libra might end up compromising its users. However, the company has stated that the project is being headed by numerous participating firms, not just Facebook itself.

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Some of the most important people from the Libra project eventually took to Twitter in order to clear the air about the whole thing. The head economist of the project stated in his tweet, “All of the design of Libra is really around being a complement of fiat [currencies], not a substitute.”

Despite the recent misgivings from regulators in different parts of the world, Facebook has stressed that the cryptocurrency will only be launched after it has been cleared by all relevant regulators all over the world. It also stated, several months ago, that Libra might not actually be launched next year at all.

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Libra Will Not Hit the Market Without US Approval, Says Zuckerberg

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Libra

Libra

The crypto sphere is known for being a disruptive force, but even this sector got a disruptive jolt of its own when Facebook (NASDAQ:FB) announced it would be launching its own cryptocurrency, Libra, in 2020. However, ever since the company announced the launch of its own stablecoin, it has come under fire from regulators from all over the world.

Major Setback?

As a matter of fact, even the United States President slammed the project and asked the company to instead apply for a banking license. It has now emerged that Mark Zuckerberg is going to tell the US Congress that the company is going to delay the eventual launch of the cryptocurrency.

The project has come under intense pressure from lawmakers, regulators, and even other companies that had initially agreed to participate in the project. Recently, some of the big names like PayPal (NASDAQ:PYPL) have decided to exit the project altogether, and the whole thing is looking quite grim for Facebook. Mark Zuckerberg seems to have conceded that the backlash against Libra is currently too strong, and hence, it would be better if the company delayed the launch altogether. In the statement, the Facebook founder wrote, “I believe this is something that needs to get built, but I understand we’re not the ideal messenger right now.”

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The company had announced its very own cryptocurrency at the height of the crypto rally this year in 2019 and had scheduled the launch at some point in 2020. After the regulatory issues were raised by officials in the different parts of the world, the company stated that it was willing to wait until all issues are solved and launch the stablecoin afterward.

While it is true that the company may have explored the idea of a delayed launch in the past, the Libra project seems to now have reached an impasse from which Facebook is struggling to recover.

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Facebook’s Libra Wants to Hit the Market in Early 2020

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Libra

Libra

It has been a hugely eventful year in the crypto sphere, and perhaps one of the most important developments has been the announcement of Facebook’s Libra. However, as soon as it was announced that it was going to be launched next year, plenty of influential regulators expressed their doubts about the cryptocurrency straightaway.

Important Progress

They are still doing so, and in a new development, it has emerged that Facebook (NASDAQ:FB) is going to go ahead with the launch of Libra next year as planned notwithstanding any misgivings from regulators. Regulators have been generally hostile towards the whole thing, and some have gone on to state that Libra could undermine traditional fiat currencies.

The head of Calibra, David Marcus, spoke to the Swiss newspaper NZZ on September 22 and stated that Facebook’s Libra is going to address all the regulatory concerns before the cryptocurrency is launched. However, he reiterated that despite the misgivings from regulators, Facebook is determined to have the launch in 2020. It is an interesting comment from Marcus considering the fact that the company had earlier stated that Libra would not be launched unless all regulatory concerns have been addressed.

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Libra is a stablecoin, and it is going to be backed by currencies like the United States Dollar, the euro, and the Japanese Yen, among others. However, in this regard, regulators believe that the presence of billions of users across Facebook, WhatsApp, Instagram, and Messenger gives the company a huge advantage. That, in turn, could lead to the erosion of the importance of traditional fiat currencies. That being said, it is only one of the concerns that regulators have expressed with regards to Libra.

Marcus brushed off those fears and stated that it is highly unlikely that anyone is going to use Libra to make everyday payments. He went on to add that those who buy Libra have no privacy fears since Facebook will have no access to the data at all.

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Facebook Libra Must Follow US Rules, Says Treasury Official

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Libra

Libra

It was back in July that Facebook’s Libra was announced and ever since the announcement, it has become the subject of intense scrutiny from lawmakers. It has not only led to the scrutiny of the entire cryptocurrency project announced by Facebook (NASDAQ:FB) but that of the wider cryptocurrency market as well and consequently, it has proven to be a massive disruption. It also coincided with the point at which Bitcoin price started giving up the momentum that it had gained in the first half of the year.

Key Details

In a new development, a key US Treasury Official has stated that Libra will need to comply with the highest regulatory compliance standards before it is launched.

Although regulatory clarity is something that many in the crypto space are eager for, it has given rise to a whole deluge of uncertainty and remains one of the factors why many tokens, including Bitcoin, have underperformed. Sigal Mandelkar, who is the undersecretary of Treasury of Terrorism and Financial Intelligence, spoke at a conference in Geneva and made the above-mentioned comments. However, more importantly, she not only spoke about Libra but went on to state that strict regulatory compliance is necessary for all cryptocurrencies that operate in the United States.

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According to reports, Mandelkar said, “Whether it’s bitcoin, Ethereum, Libra, our message is the same to all of these companies: anti-money laundering and combating the financing of terrorism has to be built into your design from the get-go.” Considering the threat of money laundering pertaining to cryptocurrencies, many regulatory officials have asked for greater regulation to be put in place.

At the conference, the official also said that it is important to put in more anti-money laundering safeguards in place in order to ensure that cryptocurrencies are not misused in any way. That being said, many in the crypto space are actually looking for more regulatory clarity so that institutional money can flow into it.

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Binance in Discussions with Facebook Over Libra Coin

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Libra Coin

Libra Coin

According to CoinTelegraph, one of the world’s largest crypto exchanges, Binance, is in “official” talks with Facebook regarding the latter’s new Libra coin.

The exchange’s strategy officer, Gin Chao, told BlockTV yesterday that the company is “very excited” about the Libra project.

What we know so far, according to Chao, is that the talks “have largely focused on dealing with infrastructure.”

Binance and Libra Coin

While the pair’s discussions are in the early stages, it seems Binance is not holding back its desire to work with Libra “as much as [it] can.”

Chao continued:

“I think the potential that libra can have, not just on mass adoption but what it means to payments and forcing regulators’ hands to catch up a bit, is all good news.”

In a separate interview, the strategist gave more details on the likelihood of Facebook’s Libra listing on Binance:

“It wouldn’t just be in [Facebook’s] interest to list their coin on our exchange. It would also be in their interest to list on other exchanges as well and that’s probably going to happen. So if they decide to go on a public chain, and they get the sort of adoption that they could get, we would probably want to list them.”

And further, he said that Binance would be enthusiastic about becoming a validator node on the Libra network.

Facebook’s Libra Coin

Facebook announced its new cryptocurrency called Libra last week. Rumors about its existence were rife for over a year, however.

According to the Whitepaper, the objective of the coin is simple; users can send money via the internet all over the world faster and with lower fees than standard banking. It also aims to incorporate the 1.7 billion people around the world who don’t have a bank account or a line of credit.

Libra differs in several ways to traditional cryptocurrencies. One of the most interesting facts of Facebook’s currency is that it is more “stable” than regular cryptos. Facebook sought to create a coin that could facilitate every-day online consumer transactions and has done this by “backing all its issued digital currency by a reserve.”

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According to Digitaltrends:

“Founding Members are required to pool money into the reserve, with the prospect of a return on their investment via dividends from low-yield investment of the reserve’s assets.”

With Libra coin only announced, it’s official launch is not expected until sometime in the first half of 2020.

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Facebook in Discussions with CFTC but Uncertainties Continue

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GlobalCoin

GlobalCoin

Some weeks back, Facebook indicated that it was launching a cryptocurrency payment service called Project Libra. The company has had a series of talks with various e-commerce companies as well as financial firms seeking support for the payment service. The latest discussions involve the US Commodity and Futures Trading Commission regarding Facebook’s stable coin initiative: GlobalCoin.

CFTC Indicates Interest

The Financial Times reported on Sunday that Christopher Giancarlo, the chairman of CFTC, had confirmed that talks regarding the support for the stablecoin were in early stages. He added that the goal of the discussions is to confirm if the cryptocurrency will fall under the regulatory remit of CFTC. The chairman said that CFTC was interested in understanding the stablecoin better and that action could only be taken when there is an application. For now, however, no application has been made for GlobalCoin.

This news comes after the company was in discussions with US and UK government officials regarding the regulatory concerns and opportunities of Facebook’s GlobalCoin. Project Libra’s objective is to permit Facebook users across the world to transfer money.

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Too Early to Tell

Since the CFTC and Facebook are still in discussions as CFTC tries to understand the coin, the chairman indicated that it was still early to ascertain the possibility of GlobalCoin falling under the CFTC remit. However, Giancarlo indicated that if the stablecoin will get backing of the US dollar, then the possibility of it being tied to derivatives will be minimal. He further indicated that the main compliance issue by regulators will be how the company will implement and adhere to anti-money laundering and KYC measures.

Some people believe that Facebook’s GlobalCoin will be a game changer in the crypto industry, while some hold that it is such an expensive feat that won’t go far.

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Libra Chief Praises Its Anti Money Laundering Standards

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Libra

Libra

Libra Chief David Marcus has claimed that the Anti Money Laundering Standards of the underfire project are superior to any other payment networks on the market today.

Libra Scrutiny Means Its On Track, Says Chief

Marcus is the CEO of Calibra, the corresponding digital wallet of Libra, and previously served as president of PayPal and a member of the Board of Directors at Coinbase. Speaking at the Money 20/20 conference in Las Vegas, he said, “I want to say that the efficacy of sanction enforcing can be much higher on Libra than other payments networks.” He pointed to the benefits of blockchain technology in enabling regulators to quickly identify risks in the system without having to rely on external reports.

Libra has been under fire from regulators in the US and Europe, who fear that it poses a threat to the economic sovereignty of nations. Speaking on that scrutiny, Marcus said, “These headlines are a preamble to more hard times ahead, and we must govern the network into a place where it will meet regulatory standards, then we will see the network come to life. People deserve much better than they have.” However, he added that the scrutiny was a sign that Libra was on the right track, saying the most meaningful innovations are always met with “damning headlines.”

The Libra Association

Despite the criticism, the Libra Association was officially launched earlier this month at its headquarters in Geneva. The Association’s charter was signed by 21 founding members, down from the original figure of 27 after several high profile defections, including Visa (NYSE:V), PayPal (NASDAQ:PYPL), and Mastercard (NYSE:MA), which all jumped ship after it was announced that Mark Zuckerberg would defend his plans to launch Libra before a Congressional committee.

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At the launch, Libra announced its executive team, which will include Marcus as well as four other high profile figures in the digital payments industry. Katie Haun, a general partner with Andreessen Horowitz; Wences Cesares, CEO of Xapo; Patrick Ellis, general counsel at PayU; and Matthew Davie, chief strategy officer of Kiva, will complete the five-person board.

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