Libra will create several stablecoins by the end of 2020. This time – with government approval.
To win over the regulatory authorities, Associação Libra will redesign its cryptocurrency, which will now be linked to individual national currencies and supervised by global authorities, as announced on Thursday (16).
“Each stablecoin would be backed up by a reserve of high-quality assets and short-term government bonds, so that its value is preserved. And we think that this type of model improves proximity to central banks and public institutions. “
According to the official announcement on April 16, the Libra Association states that they will make the currencies fully compatible with modern KYC / AML requirements. Since Libra’s original plan was not good enough for regulators, the major update seeks to turn the negative into the positive. World banks were saying that the Pound could undermine financial stability in some countries. Libra Association vice president Dante Disparte said during an interview that proper regulation is possible. But only after extensive debates:
“Libra will be no different than a stablecoin. It could be used as an efficient cross-border settlement currency, as well as a neutral and low volatility option for people and companies in countries that do not yet have a stablecoin. ”
Libra’s position on regulation is predictable, but inevitable, for its survival. They claim that the new vision allows them to reformat the initial white paper, adding strict requirements in favor of central banks. The blockchain will help Libra not to compete with national currencies. Previously, the G20 was warning major governments that stablecoins are enemies and that projects like Libra should be banned.
The project will now focus on providing individual stablecoins for specific fiat currencies such as USD, EUR and GBP, as well as its Pound Coin. Instead of being supported by a basket of fiat currencies, the Libra currency will now be supported by the stablecoins. Smart contracts will keep their price tied to the combination of stablecoins.
The announcement of the main update of the white paper receives comments from the Libra Technical Master, Michael Engle. He says Libra will take several big steps away from the classic ‘blockchain ideology’:
“Our goal was never to emulate other systems, but to leverage the innovative approach to using distributed governance and distributed technology to create an open and reliable system.”
In addition, Michael describes the way to match blockchain with compliance rules. For the network, new categories of participants in use. Among them are VASPs (Virtual Asset Service Providers) and UWs (Unholsted Wallets):
“We believe that most people will interact with the Libra payment system through VASPs, such as custody portfolios and exchanges. We also believe that it is important to allow the broader developer community to access the Libra network, enabling non-hosted portfolios with protocol-level compliance controls. “
Michael continues to observe that the first version of Libra presented access without permission to the creation of knots. However, regulators say that this measure would allow users to avoid strict requirements. Now, only a chosen circle of participants will be qualified to maintain the nodes’ networks. They will participate in the governance of Libra. The Association, in turn, should keep an eye on regulations.