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Inside Libra

Inside Libra (Oct 9th, 2019)

1. Facebook CEO Mark Zuckerberg has said that he will testify before the U.S. House Financial Services Committee later this month on its Libra cryptocurrency. Zuckerberg will be the only witness at a hearing called "An Examination of Facebook and Its Impact on the Financial Services and Housing Sectors." The hearing is due to take place October 23 at 10 a.m. eastern time. According to a Facebook spokesperson, Zuckerberg "looks forward to testifying" before the committee, in addition to responding to questions from lawmakers. –CNBC

Why It Matters: This marks the first step from Zuckerberg in helping to address concerns, particularly those raised by global regulators, about Libra and Facebook's plans with it. Since being announced in June, many have expressed concern over the currency. It will also be a rare opportunity for lawmakers to question the CEO who very rarely visits Washington D.C. The last time he was in the city was last month to discuss technology regulations with regulators.

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2. Sen. Sherrod Brown (D-Ohio) and Sen. Brian Schatz (D-Hawaii) have written a letter urging Mastercard, Stripe, and Visa to reconsider their involvement with Libra. In the letter, the two wrote that Libra poses a risk to global financial systems and the businesses' wider payments systems. Not only that, but they highlight that Congress, members of the Libra Association, and financial regulators have struggled to obtain "sufficient details from Facebook" regarding the risks that the stablecoin could pose. This includes criminal and terrorist financing, interference with monetary policy, exposing consumers to risks, and destabilizing the global financial system. As a result, the senators have urged the three companies to consider how they would manage these risks, given the fact that Facebook, in their opinion, hasn't demonstrated that it is "taking these risks seriously." –BLOOMBERG

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3. The Bank of England (BoE) has warned that Libra will face tough oversight prior to its launch. The BoE said yesterday that Libra had the potential to be a "systemically important" payment system and that it needed to be regulated. The BoE's concern over Libra also extends to the wallet providers and exchanges that are linked in the chain to the payment system set out for Libra. As a result, the central bank's Financial Policy Committee (FPC), which is responsible for spotting and removing threats to the U.K.'s financial stability, said that the various links in the chain meant there was a "need to ensure end-to-end resilience." Because of this, the FPC is looking at the functions of Libra and wants to apply traditional regulations to them. –FINANCIAL TIMES

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4. A Libra fork plans to create a permissionless stablecoin that is free of corporate control. Known as OpenLibra, it will function as a stablecoin that will be pegged to the Libra currency. Speaking about the initiative at Devcon, an Ethereum developer conference, Lucas Geiger, co-founder of blockchain infrastructure startup Wireline, said that they are going to fork the code and the community to create OpenLibra. He further said that there will be no token sale and that no company or equity is behind it. Research for OpenLibra is being supported by a grant from the Interchain Foundation, a nonprofit that supports the Cosmos blockchain network development. Cosmos is also one of OpenLibra's core team members, along with Chainlink, Web3, and Democracy Earth, among others. –COIN DESK

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5. Vodafone has reiterated its support for Libra but wants it to be independent of Facebook. Nick Read, CEO of the mobile phone giant, said that it was essential that the project had a separate chief executive to guarantee the success of the project. He went on to say that as soon as one is appointed than people will be able to "understand the ambition of the entity itself." –THE NEXT WEB

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6. Simon Morris, the Libra Association's head of product, has departed amid increasing concerns over it. When Morris first joined he claimed that he was "super excited" and that there was much work to do on the project. Now, four months after Libra was unveiled, Morris has left. The departure of Morris, who was a former executive at software company BitTorrent, follows the news of PayPal pulling out of backing Libra. Mastercard and Visa are also, reportedly, reconsidering their positions with Libra. The stablecoin, which is projected to launch next year, will enable people to send and transfer money in several currencies as well as buy goods and services. However, it has received increasing regulatory pressure from global regulators. –THE TELEGRAPH

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7. PayPal's decision to leave Libra may trigger fresh hearings with Congress, according to Cowen analyst Jaret Seiberg. According to Seiberg, regulators may want to know more on why PayPal decided to step away. He added that since Facebook's announcement on Libra in June, the project has failed to attract Washington's "buy-in." Seiberg added that others may follow PayPal rather than get into "policy fights over privacy and private currencies." –BLOOMBERG

Why It Matters: With the departure of PayPal and the possibility of further hearings with Congress, it could be "harder to convince policymakers that Libra is independent of Facebook, " said Seiberg.

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This newsletter was written and curated by Rebecca Campbell. She has been writing and reporting on various industries for the past 10 years, more specifically tech in the last three. Connect with her on Twitter.

Editor: David Stegon (senior editor at Inside, whose reporting experience includes cryptocurrency and technology).

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