regulation

Facebook’s Crypto Libra May Kill Launch in India, Its Biggest Market: Report | CCN Markets

Posted in law, Libra, regulation, Research Notes

The Economic Times, India’s biggest business daily, reports that Libra will not be available in India, citing people with direct knowledge of the matter:

“The social network’s digital wallet, Calibra, won’t be available in markets where “cryptocurrencies are banned or Facebook is restricted from operating in,” the person said. “Facebook has not filed any application with RBI (Reserve Bank of India) for its cryptocurrency in India,” said a second person aware of the matter. RBI did not respond to queries from ET.”

This, despite a previous report that Facebook specifically picked India as the launch market for its cryptocurrency.

 

India will be a tricky nut to crack for Facebook’s Libra

The Indian government and regulators have traditionally carried a hostile view toward cryptocurrencies, implementing a slew of measures to discourage adoption of the likes of bitcoin.

India has taken a variety of steps to stifle the growth of cryptocurrencies, fearing that bitcoin and the likes are instruments for laundering money, duping naïve investors, evading tax, and financing terrorism.

 

The government has already instructed banks to stop dealings with cryptocurrency exchanges, while the income tax department has singled out people involved in crypto transactions.

What’s more, the Indian government might put you in jail for a decade if you’re found in possession of bitcoin or other cryptos, if the draft of the country’s Banning of Cryptocurrency and Regulation of Official Digital Currency Bill is to be believed.

 

All of this makes it difficult for Facebook’s Libra to crack the cryptocurrency market in India. This would be a big blow for the social media giant as India is its largest market, accounting for more than 10% of its user base.

Statista estimates that Facebook has 260 million users in India out of a global user base of 2.38 billion. So missing out on this market could deal Libra a big blow as Facebook will be missing out on a huge chunk of the population that has been rapidly transitioning toward digital modes of payment.

India’s convoluted laws won’t be easy to bypass

Facebook’s crypto Libra is raising a lot of eyebrows in countries such as the US and France, where regulators are concerned about how the social media giant will keep user data safe and private. But it is an entirely different ball game in India where Facebook could face an outright ban.

According to Salman Waris, who is the managing partner at specialist technology law firm TechLegis Advocates & Solicitors, Facebook could fall on the wrong side of the Reserve Bank’s norms and India’s Income Tax Act. He told ET:

“Under Section 79 of the Indian IT Act, Facebook is obligated to take ‘all due care’ to ensure its network or platform is not used for illegal activities like dealing in cryptocurrencies in India. Section 79 would apply to Facebook even though it is based out of India. Section 75 of the IT Act also gives extraterritorial jurisdiction to the law.”

Even if Facebook’s Libra is a closed system that’s used for making peer-to-peer payments on its platforms such as Messenger and WhatsApp, it could invite the wrath of the Indian government and regulators.

The establishment has tried to kill cryptocurrencies in India with a lot of zeal. So it won’t take long for the government to believe that bad actors are using Facebook Libra to launder money or finance terrorism, taking a massive market opportunity away from the social media company.

Facebook co-founder: Libra coin would shift power into the wrong hands | Financial Times

Posted in Libra, opinion, regulation, Research Notes

What Libra backers are calling “decentralisation” is in truth a shift of power from developing world central banks toward multinational corporations and the US Federal Reserve and the European Central Bank.Developed world central banks will understandably prioritise their own economies. Meanwhile, the fewer rupees or lira a country’s citizens hold, the less power the national central bank has to set monetary policy, making it harder to stimulate the local economy in times of economic stress.In the recent Greek crisis we saw first-hand what happens when emerging markets prematurely give up local control of their currency. As a member of the eurozone, Greece lacked control over its monetary policy and had no way to appropriately devalue its local currency after the financial crisis. A decade later the Greek economy is still 25 per cent smaller and its unemployment rate is the highest in the eurozone. Libra could render other central banks equally powerless in the face of recession.The Libra Association could also wield significant power over the workings of global finance. Unless regulators jump in quickly, these for-profit companies will set the standards for identity verification, at least in the short run, as well as defining the rules and enforcement around the privacy of transactions and what to do in case of theft.Facebook and its partners will decide which banks, payment processors and distribution agents to work with, making or breaking companies in some markets overnight. This will entrench existing players rather than creating a truly decentralised system.Many will say these fears are overblown: it’s not clear if Libra will even get off the ground. But if we’ve learnt anything about Facebook, it’s that we should not underestimate its power to transform how people interact. The company’s decision to offer live broadcasting made it possible for teenagers to stream bullying, terrorists to livecast an execution and a gunman a mass shooting. It has similarly transformed mobile messaging and news and journalism faster than many imagined.Governments around the world cannot afford to adopt a wait-and-see approach. The G7 has already set up a working group to review the project in conjunction with the IMF and central banks. Regulators in emerging markets should slow down Facebook’s push by preventing local banks and payment processing networks from accepting Libra. If a Libra user can’t move the coin into a local bank account or cash it in for local currency, it’s unlikely to take widespread hold. This need not be a permanent ban. It simply buys time for all of the implications to be thought through.At the same time, US and Swiss regulators have a central role, for they are likely to be the ones setting standards for know-your-customer, anti-money laundering and financial stability requirements. Watchdogs have underestimated Facebook’s power in the past, allowing it to swallow potential rivals Instagram and WhatsApp. This time the scrutiny by the appropriate government regulators should be nothing short of exhaustive.

Source: Facebook co-founder: Libra coin would shift power into the wrong hands | Financial Times

‘Billions’ May Be Saved By Tokens Backed With Central Bank Money: BoE Chief – CoinDesk

Posted in cryptocurrencies, Libra, regulation, Research Notes

“The Bank of England approaches Libra with an open mind but not an open door, said Carney. “Unlike social media for which standards and regulations are being debated well after it has been adopted by billions of users, the terms of engagement for innovations such as Libra must be adopted in advance of any launch.”Libra, if it achieves its ambitions, would be systemically important,” he went on to say, continuing: “As such it would have to meet the highest standards of prudential regulation and consumer protection. It must address issues ranging from anti-money laundering to data protection to operational resilience. Libra must also be a pro-competitive, open platform that new users can join on equal terms. In addition, authorities will need to consider carefully the implications of Libra for monetary and financial stability.”

Source: ‘Billions’ May Be Saved By Tokens Backed With Central Bank Money: BoE Chief – CoinDesk

TILTing 2019 – exploring the journey of crypto-assets across the EU financial legal framework

Posted in blockchain, cryptocurrencies, decentralization, finance, issues/conflicts, Latest news, law, papers, regulation

At TILTing 2019 the Lab presented a study on the legal instruments that are, as of today, applicable to blockchain-based digital assets under European law, and the relative enforcement challenges. The broader question to be tackled is whether and how regulators deal with such challenges, and what are the interests at stake. http://ipkitten.blogspot.com/2019/05/tilting-perspectives-2019-report-2.html

Cashing In: How to Make Negative Interest Rates Work – IMF Blog

Posted in bitcoin, cryptocurrencies, politics, regulation, Research Notes

Many central banks reduced policy interest rates to zero during the global financial crisis to boost growth. Ten years later, interest rates remain low in most countries. While the global economy has been recovering, future downturns are inevitable. Severe recessions have historically required 3–6 percentage points cut in policy rates. If another crisis happens, few countries would have that kind of room for monetary policy to respond.To get around this problem, a recent IMF staff study shows how central banks can set up a system that would make deeply negative interest rates a feasible option.

Source: Cashing In: How to Make Negative Interest Rates Work – IMF Blog

Regulating Blockchain: Critical Perspectives in Law and Technology, 1st Edition (Hardback) – Routledge

Posted in blockchain, decentralization, papers, regulation, Research Notes

the distributed architecture underpinning the initial Bitcoin anarcho-capitalist, libertarian project, ‘blockchain’ entered wider public imagination and vocabulary only very recently. Yet in a short space of time it has become more mainstream and synonymous with a spectacular variety of commercial and civic ‘problem’/’solution’ concepts and ideals. From commodity provenance, to electoral fraud prevention, to a wholesale decentralisation of power and the banishing of the exploitative practices of ‘middlemen’, blockchain stakeholders are nothing short of evangelical in their belief that it is a force for good. For these reasons and more the technology has captured the attention of entrepreneurs, venture capitalists, global corporations and governments the world over.Blockchain may indeed offer a unique technical opportunity to change cultures of transparency and trust within cyberspace, and as ‘revolutionary’ and ‘disruptive’ has the potential to shift global socioeconomic and political conventions. But as a yet largely unregulated, solutionist-driven phenomenon, blockchain exists squarely within the boundaries of capitalist logic and reason, fast becoming central to the business models of many sources of financial and political power the technology was specifically designed to undo, and increasingly allied to neoliberal strategies with scant regard for collective, political or democratic accountability in the public interest. Regulating Blockchain casts a critical eye over the technology, its ‘ecosystem’ of stakeholders, and offers a challenge to the prevailing discourse proclaiming it to be the great techno-social enabler of our times.

Source: Regulating Blockchain: Critical Perspectives in Law and Technology, 1st Edition (Hardback) – Routledge

The economic potential and risks of crypto assets: is a regulatory framework needed? | Bruegel

Posted in blockchain, cryptocurrencies, papers, regulation, Research Notes, UncategorizedTagged

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What is the economic potential and the risks of crypto assets? Regulators and supervisors have taken great interest in these new markets. This Policy Contribution is a version of a paper written at the request of the Austrian Presidency of the Council of the European Union for the informal ECOFIN meeting of EU finance ministers and central bank governors.

Source: The economic potential and risks of crypto assets: is a regulatory framework needed? | Bruegel

Diar – Forward Outlook Digital Assets & Regulation Newsletter

Posted in papers, regulation, Research Notes

The Weekly Analytical Publication onDigital Currency, Assets, Payments & Regulation Diar provides concise coverage and analysis of significant developments within the global digital currency industry. This information service delivers the expert insight critical for informed decision making within the constantly evolving global finance & regulatory environment.

Source: Diar – Forward Outlook Digital Assets & Regulation Newsletter