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Stablecoins Claimed to Be Securities

Stablecoins Claimed to Be Securities

  • Libra is a blockchain digital Currency to be established by the social media platform Facebook.
  • Facebook plans to allow its users to execute financial transactions through Libra via the Calibra digital wallet.
  • Libra is suffering from a great deal of pressure from the U.S lawmakers. This stress is having a direct impact on the CEO, Mark Zuckerberg.

Libra is a blockchain digital currency to be established by the social media platform Facebook. Since only the rudimentary experimental code has been released, The currency and network itself do not yet exist.

The launch of this new initiative is proposed to be in the year of 2020. The Libra Association, a membership organization of several companies specializing in various associated platforms will be managing and monitoring the project, currency, and transactions.

The plan is for the Libra token to be backed by financial assets in a measure to avoid volatility. The company has announced that each of its partners will invest an initial US$10 million to provide full asset backing on the day Libra opens.

Facebook plans to allow its users to execute financial transactions through Libra via the Calibra digital wallet. Politicians from US parties acknowledge Libra as an asset, though the founder claims the platform to be similar to payment platforms like Paypal, Coindesk, etc.

Facebook’s Libra shall be subject to severe regulation as the same was classified to be a security under legislation implemented by U.S lawmakers. The claim came into existence when Sylvia Garcia and Lance Gooden belonging to the House Financial Services Committee opined that Managed Stablecoins are Securities under the Securities Act of 2019. They added that Libra and other managed stable coins “are clearly securities under existing law”.

Bitcoins: an Asset or Currency?

An analysis must be made between Bitcoin as a currency and Bitcoin as an asset to understand the situation. Bitcoins can be classified as digital money within a decentralized peer-to-peer payment network. It is a combination of fiat currency and commodity currency independent of any governmental authority.

The statistical properties of Bitcoin suggest that the same does not correlate with traditional assets which include stocks, bonds, and commodities. It is to be understood that Bitcoins are essentially utilized as a speculative investment but not as an alternative currency and medium of exchange. Since Bitcoins are still small, compared to other assets, the same does not constitute an immediate risk for monetary, financial or economic stability.

Zuckerberg’ Comment

Lately, Libra is suffering from a great deal of pressure from the U.S lawmakers. This stress is having a direct impact on the CEO, Mark Zuckerberg.

The members of the Financial Services Committee emphasized the need for bringing clarity to such regulatory structures to ensure consumer protection and Government monitoring. These digital currencies require appropriate regulatory actions to create a trustful bond between the investors and the issuers.

It is also to be noted that earlier this month, the head of Libra cryptocurrency wallet, Calibra stated earlier this month that Bitcoin is more of an asset, like gold than a true currency.

Conclusion

The fact of whether digital currencies like Libra are assets or not must be initially ascertained by the appropriate authorities through a reasonable analysis on the basis of available statistics. This information must be accessed to decide whether existing regulatory laws apply to such currencies. This, in turn, will determine the impact of such currencies in the near future.

The post Stablecoins Claimed to Be Securities appeared first on TheCoinRepublic.



This post first appeared on Thecoinrepublic: Cryptocurrency, Bitcoin, Ethereum News, please read the originial post: here

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