What a coincidence! Shortly after the DCEP test news leaked out from the Chinese banks, Libra released its updated whitepaper 2.0. We identify four key changes to address regulatory concerns:
- Offering single-currency stablecoins in addition to the multi-currency coin;
- Enhancing the safety of the Libra payment system with a robust compliance framework;
- Forgoing the future transition to a permissionless system while maintaining its key economic properties;
- Building strong protections into the design of the Libra Reserve.
Libra did not abandon its previous design of the Libra coin (LBR), however it has revamped LibraUSD, LibraEUR and LibraGBP, etc to be the key components of the LBR basket, which are quite similar to the design of SDR (Special Drawing Rights by IMF). In the composite basket of SDR, USD represents 41.73%, EUR 30.03%, RMB 10.92%, JPY 8.33% and GBP 8.09%，while in the basket of LBR, LibraUSD accounts for 50%, LibraEUR 18%, and LibraGBP 11%, etc. The higher weightage allocation to USD and the absence of RMB mainly reflects a compromise to the United States. But the current weight in the whitepaper is still for illustration purposes, and Libra association will continue to discuss with regulators and central bankers to fix the ultimate weights of different currencies. Libra also makes it clear that once CBDCs are available, it intends to replace its single-currency stablecoins with CBDCs.
Even though the Libra association says the coin is just a complement, not a substitute to domestic currencies, its insistence on LBR, the multi-currency coin, still raises questions on whether it would be approved by the United States. LBR is in fact a new currency independent of USD, even though USD accounts for 50% of the composite basket. We see from the design of LBR the ambition Facebook wants to play in the future.
In order to address regulators’ concerns, Libra will forgo the future transition to a potential public chain, and will instead maintain a consortium chain with full-compliance, which is a big compromise, but will be a huge progress for Facebook if approved. It will also educate people all over the world on the the issue of blockchain and wallets, given that Facebook has 2.7 billion users worldwide. This will in fact lower the entry barrier to the real crypto world, and will benefit the crypto world in the longer run.
When people in the matrix adapt more to the future world, they might be more prepared to migrate to the Zion world, which may be undesired by regulators.