The Libra Association, an independent group organized by Facebook to manage the Libra stablecoin project, has released a new version of its whitepaper with several changes aimed at addressing regulatory concerns.
The updated whitepaper, released on April 16, outlines several key changes including plans to offer single-currency stablecoins in addition to a multi-currency coin, as well as enhancing the security and the safety of the Libra payment system.
The original plan for the Libra stablecoin was to be backed by a mix of currencies and government debt, but following concerns raised by regulators on the potential for a multi-currency Libra Coin to interfere with monetary sovereignty and monetary policy, the organization said on Thursday it will be offering stablecoins backed by single currencies.
“Each single-currency stablecoin will be fully backed by the Libra Reserve, which will consist of cash or cash equivalents and very short-term government securities denominated in that currency,” the whitepaper reads. “We hope to work with regulators, central banks, and financial institutions around the world to expand over time the number of single-currency stablecoins available on the Libra network.”
Alongside single-currency stablecoins backed by the likes of the US dollar or the euro, the Libra Association will be offering a redesigned Libra Coin, which will be a composite of single-currency stablecoins supported by the network. The Libra Coin is intended to be used as a cross-border settlement coin, the organization said.
The Libra Association also plans to enhance the safety of its payment system with a “robust framework for financial compliance and network-wide risk management,” as well as following high standards for anti-money laundering and terrorist financing, it said.
Libra applies for a payment system license in Switzerland
The Libra Association is now waiting on regulatory guidance from the Swiss Financial Market Supervisory Authority (FINMA), its main supervisory authority since it’s based in Geneva, and has applied for a payment system license with the regulator.
FINMA confirmed on Thursday it received the Libra Association’s application for a license, though noted that the application filed “differs considerably from the project originally submitted.” The regulator said it will continue to work closely with the Swiss National Bank and international partners including central banks and supervisory authorities during its evaluation of the project.
The Libra network was initially planned to launch by the end of June 2020 but this is now being postponed to sometime between mid-November and the end of the year, Dante Disparte, the Libra Association’s head of policy and communications, said.
The Libra project was unveiled in June 2019 and was quickly met with skepticism, with regulators noting the monetary risks related to a global digital reserve system backed by powerful firms, and voicing concerns related to privacy, money laundering and terrorism financing.
Libra’s most prominent original backers, including Mastercard, Visa, Stripe and PayPal, left the organization in the wake of the scrutiny.
The Libra Association currently counts 22 members including Uber, Shopify, Coinbase, Andreessen Horowitz and Union Square Ventures. It hopes to grow to 100 members.
