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Libra Squeezed in Week of Hearings as IMF Envisions Crypto Spreading Like Wildfire

Nick
Author Nick
Published
Updated

Ethereum Stats

Ethereum Price: $219.86
Ethereum Price (BTC): 0.021105 BTC
Market Cap: $23.61B
ETH Network Dominance*: 73.61%
7 Day Candle**: $225.51 / $236.25 / $191.44 / $219.86

️ Nick’s Market Summary

Cryptocurrency news has been dominated again by the Libra project following multiple hearings which saw the currency being grilled by members of Congress, the Senate and even a handful of Bitcoin maximalists. The result was Libra being squeezed in the middle – too decentralized for regulators and not decentralized enough for maximalists.

Libra is “not a cryptocurrency” according to Bitcoiners and yet too similar to a cryptocurrency for regulators to stomach. On one side we have those passionately defending the value of the US Dollar and the other we have those passionately defending the value of Bitcoin – all while supposedly waving the banner of the free market. Libra, therefore, became a common enemy between unlikely allies and the real beneficiary over the two day hearing was Bitcoin – a name which was thrown around in a largely positive light; Congressman McHenry went as far as saying, “Bitcoin is an unstoppable force.”

What transpired for Libra was that, while Washington did not want to be “the place where technology goes to die”, it may become the place where technology goes to get delayed for years. For many in power, Libra – under its current launch plan – is dead on arrival. Privacy concerns surrounding Facebook’s visibility of payment data – or the lack thereof for regulators – is a catch 22 that is unlikely to be resolved any time soon; particularly if the blockchain has any hope of moving towards a permissionless state. Those with authority seem set on regulating the project into the ground and the need for overzealous KYC requirements will make Libra, at best, a glorified PayPal.

From an Ethereum price viewpoint there is still something to be hopeful for – Libra is likely to be listed on exchanges, opening up easy access to ETH, and with each blockchain using a smart contract layer, synergies between Libra and Ethereum could prove enormously powerful. More hopeful still, the Libra Association may become so disillusioned by the delays they face (it seems impossible that Libra will launch next year or even by 2022), that the appeal of moving their project to a permissionless blockchain like Ethereum (which by that point would have scaled significantly) would be too hard to ignore.

– Nick, Owner EthereumPrice.org

Network Effect is the X-Factor to Mass Adoption of Cryptocurrency According to IMF

International Monetary Fund (IMF) managing director Christine Lagarde said earlier this year that blockchain innovators are shaking the traditional financial world and having a meaningful impact on current industry players. She had previously also acknowledged that the IMF could release its own digital asset or central bank digital currency (CBDC) in the future for which the monetary fund could propose a hybrid approach by establishing a permissioned but interoparable blockchain similar to JP Morgan’s Quorum.

Last week the IMF highlighted 5 factors that blockchain brings to the table including convenience, ubiquity, complementarity, low transaction costs and trust. According to the IMF, these five factors, coupled with the “X-Factor” of network effect, could spread adoption of digital assets like wildfire – likening it to the network effect seen by users switching from SMS to WhatsApp.

The IMF aims to create a conceptual framework for categorizing new digital currencies as well as the repercussions of their emergence for central bank policy.

Doubt Cast on India’s Leaked Draft Bill that Would Ban All Cryptocurrencies

Recent draft legislation titled “Banning of Cryptocurrency & Regulation of Official Digital Currencies” was uploaded to Scribd.com last week and revealed the possibility of outright ban of all cryptocurrencies in any form by the Indian government with the exception of a Digital Rupee and the use of distributed ledger technologies (DLT) for research.

Nischal Shetty, CEO of India’s WazirX crypto exchange, has Tweeted his support for positive regulation as opposed to a sweeping ban which could threaten India’s future as a “crypto superpower”. There has also been doubt cast on the legitimacy of the document due to a previous statement by India’s Prime Minister, Narenda Modi, when he joined other leaders of the G20 in June 2019 in Japan.

At the G20 he asserted that “we will make united efforts to address major global economic challenges… We reaffirm our commitment to applying the recently amended FATF [Financial Action Task Force] standards to virtual assets and related providers for anti-money laundering and countering the financing of terrorism.”

If India were to adopt the FATF’s policies, cryptocurrencies would effectively receive legal status and the country would be ready to adopt digital asset regulations. On the other hand, should the ban eventually be passed, it is not clear how the country would be able to enforce it.

It seems that India, like the US, is still grappling with how to move forward with digital currencies. With regulatory clarity often being cited as a leading concern for investors in this space, decisions on this matter couldn’t come sooner.

US Treasury Shoots Another Arrow at Facebook’s Libra

Following last week’s comments from Donald Trump and the FED on cryptocurrency and Facebooks Libra in particular, the US Treasury Secretary Steve Mnuchin this week shot another arrow at cryptocurrency and specifically Facebook’s Libra. He criticized cryptocurrency for having “been exploited to support billions of dollars of illicit activity like cybercrime, tax evasion, extortion, ransomware, illicit drugs and human trafficking.” He went on to say explicitly that he also was not happy with Facebook’s launch plan for Libra.

“There was a clear agreement from all G7 finance ministers and central bank governors that Libra, in particular, raises some very significant concerns, and cryptocurrencies more broadly.”

A representative of Facebook went on record saying that the “journey will be a long one” and Facebook “strongly agrees” that “the process for reviewing Libra needs to be patient and thorough” but at the same time also expressed the urgency for the social media colossus to run its own cryptocurrency, warning that “others” may make headway in the space first.

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