Libra still needs more baking
voxeu.org
voxeu.org
There is nothing moral about agencies such as the FATF. They are products of geopolitics, not user interests. Expect compliance requirements to get more and more byzantine with no end in sight.
You can either comply (a losing battle) or you immunize (a-la Bitcoin).
It is for example very hard to make sense of their definitions. Here is their definition of "virtual asset": "A virtual asset is a digital representation of value that can be digitally traded, or transferred, and can be used for payment or investment purposes. Virtual assets do not include digital representations of fiat currencies, securities and other financial assets that are already covered elsewhere in the FATF Recommendations." [1]
Some nitpicking: Taken literally, Bitcoin falls through this definition, because a Bitcoin is not a "digital representation of value", it is a "digital value". It does not represent anything, it is the value itself. But that's the least problem of all. The FATF commits the sin of providing a negative definition, basically saying every digital representation of value is a virtual asset except for those already covered elsewhere. No biologist would ever define "tree" as every plant not already described elsewhere. It is not something you can meaningfully work with. But let's see what they already covered elsewhere. For example, they cover "funds" elsewhere. Funds is defined as "every kind of asset". But if "virtual assets" are "assets" and therefore also "funds", they are already covered elsewhere and thus no "virtual asset" anymore. One should also note that FATF frequently uses the term "funds or other assets", indicating that they don't really know the meaning of the word "every".
Edit, just to add another point: you would think that the 134-page strong document "INTERNATIONAL STANDARDS ON COMBATING MONEY LAUNDERING AND THE FINANCING OF TERRORISM & PROLIFERATION" in which the expression "money laundering" is used 284 times would somehow provide a clear definition of what money laundering is? You would be wrong. "Money laundering offense" is tautologically defined as "References (except in Recommendation 3) to a money laundering offence refer not only to the primary offence or offences, but also to ancillary offences." That's all. No further specification about what money laundering actually is.
[1]: https://www.fatf-gafi.org/media/fatf/documents/recommendatio...
Honest question: do Bitcoin proponents honestly believe it “immunises” them against the law?
Doesn't that necessarily require avoiding legitimate financial institutions at all costs?
> A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution.
The immunity that Bitcoin pursues is on the infrastructure / development level, in that the project contributors take great pains to prevent themselves from being subject to regulatory compulsion.
Tbh, it is starting to sound a lot like some sort of real world e-coin that is tied to some of the least privacy concerned corporations, banks and governments and with none of the advantages of an actual decentralized cryptocurrency. It looks as it will basically be just an analogous to marked dollar bills but with easier digital traceability? Or am I going too much into conspiracy theory territory?
If successful, FB can reap billions in transaction fees to allow users to transact on their platform, be it for money transfer or for ecommerce.
I would not be surprised if Zuckerberg sees a future where the reserve currency is a digital one instead of the USDollar, where global currencies are valued in relation to Libra, rather than the $
Amazon does both of those. (some) Modern tech companies want to be everything platforms.
TL;DR Banking the unbanked with cheap micro transaction makes them milkable.
Get more economists on board to design the institutional infrastructure, people to get the legal compliance right, and then make it the e-dollar. (or something more global in cooperation with other states). Isn't this at the end of the day what people want out of this, the digital equivalent of a normal currency?
Correct me if I'm wrong here, but isn't most of our money already digital? What do we gain, other than exchange fees if we want paper dollars and cheques?
It would have the potential to cut a lot of the middlemen out. I always found it curious that with cash we basically take it for granted that there's a ubiquitous, legally guaranteed payment infrastructure but with digital currencies it's more like a splintered set of services that take a quite considerable cut.
Also a very practical, relevant case. In a situation like this corona crisis, there'd be a trivial way to send everyone their 1200 bucks.
In my country (Australia), our Government could deposit money into the bank account that paid their last tax return with in less than a day... We have no transfer fees and real-time transfers (you can link a phone number to your account too). For international, things like TransferWise are pretty compelling and have crazy low fees...
Sure, transactions are digital, but the underlying nature is still physical.
USD is already a digital currency.
It’s not digital as a cryptocurrency, but more as rows in database tables.
As a simple example, if everyone wanted to withdraw their money, all at once, very few people would actually be able to.
Having it tied to the US dollar would be a huge pain. Many of us live elsewhere and use other currencies; also using dollars brings in a huge regulatory regime that people may not want to be involve with (e.g. if buying/selling Libra means I have to file a US tax return then it's a non-starter for me).
> Get more economists on board to design the institutional infrastructure, people to get the legal compliance right, and then make it the e-dollar. (or something more global in cooperation with other states). Isn't this at the end of the day what people want out of this, the digital equivalent of a normal currency?
What are those people going to bring to the table that Facebook et al aren't already doing? They have a bunch of major payment networks involved, they've got the institutional connections and huge legal compliance departments already. Being tied to a particular national government would likely be more of a handicap than a help, as the project would then be exposed to much bigger political considerations.
I tend to lean against regulation but this is one of those cases where I wouldn't mind seeing FB somehow banned from anything related to currency.
They'll have their own armed forces, soon enough
Remember the letter sent to Libra consortium members by US senators? [1]
They threatened Visa, Mastercard and Stripe with extreme regulatory scrutiny of all their payment business (not only Libra-related) in case they would stay on the project. The threat worked and the threatened companies left the consortium soon after.
This is right out of the playbook of despotic governance: create laws so complex that everyone is probably violating some of them all the time and then selectively enforce the law against those you don't like.
[1]: https://www.brown.senate.gov/newsroom/press/release/brown-sc...
A dollar replacement with zero additional benefits (like those mentioned above) seems like the exact "solution without a problem" that existing "blockchain" tech was pretending to not be. TL;DR - this won't work!