eToro, the crypto-oriented social trading and brokerage provider, recently published a position paper that stated that in order to get a cryptocurrency project launched, Facebook should focus on stablecoins that are distributed by regulated third parties instead of the company’s own digital currency.
Facebook’s cryptocurrency project, Libra, has faced many obstacles since the announcement of its launch in June this year. Politicians and regulators across the United States, the United Kingdom and Europe have expressed concerns about the social media giant’s scale and influence, and its history with customer data has also been a cause of concern for them.
eToroX Labs, the blockchain technology study department of eToro, claims that Facebook’s cryptocurrency project and its aim of developing a digital payment system that works on individual peer-to-peer level can be used by millions of people who are not centralized bank users across the globe, has untapped potential and should certainly not be ignored and dismissed.
Instead of creating their own virtual currency, the trading platform believes that Facebook should work towards collaborating with reliable and regulated third party partners which will develop stablecoins backed by traditional fiat currency.
Libra has also been called ‘ZuckBucks’ by politicians and regulators in the United States. eToro further states that this can remove Facebook from the position of having to control the digital currency so it can delegate that energy towards Calibra, the first cryptocurrency wallet to include a system for transactions that can be easily accessible by the company’s 2.7 billion users through Facebook’s several platforms including WhatsApp.
Stablecoins and Regulatory Frameworks
eToro has previously successfully launched its own stablecoins but has faced issues in getting merchants to accept them as means of transaction due to lack of a single standard. Facbeook has also previously explored the idea of using a variety of stablecoins that will be pegged to several fiat currencies including the US dollar, Pound Sterling and the Euro. However, regulators have had issues with Facebook in charge of that many currencies.
The CEO and co-founder of eToro, Yoni Assia, stated that Libra is a “trailblazing opportunity” for innovation in the financial sector and it should focus of pursuing a single asset class, and Libra’s Association should work towards obtaining simple regulatory frameworks for the control of third parties and use Libra chain for transactions.
Assia further added that the burden of regulations would fall on those who use distributed ledger technology (i.e. blockchain) for their own profits, in instances of collateralized stablecoins, assets or other financial instruments. Hence, there won’t be a need for Facebook’s grandiose and highly censured crypto project Libra.
