One of the world's leading crypto exchanges Binance is in talks with Facebook about the listing of the social network's stablecoin called Libra.
This means that, theoretically, Facebook's native currency can be traded between various social groups all over the globe. Given that Libra is declared as a stablebcoin, can it compete with such industry's mammoths like Tether, TrustToken, and if it can, how exactly?
iHodl asked the crypto industry experts what they think about the future of Facebook's new product.
Alexey Kirienko, EXANTE Co-Founder
"Libra will unlikely in the foreseeable future compete with bitcoin or the U.S. dollar, but under certain conditions it can become a leader among stablecoins. The main advantage and simultaneously the curse of Libra is its connection with Facebook, and right now there is a historical choice: independence from the authorities or full assistance. On the one hand, Libra could be the ideal stablecoin — the capitalization of the parent corporation is many times greater than any of its closest competitors. It's also deprived of the competitors' Achilles heel — the availability of reserve funds in fiat, which correspond to the size of capitalization. Tether's capitalization is in the billions, but transparency and actual provisioning continue to raise questions. Regarding Libra, there is no doubt: it's provided with real money and will be able to keep the course stable in any situation. On the other hand is the willingness to interact with the authorities and regulators, which may require not only the disclosure of personal data, but also freezing of accounts and blocking transactions. Having agreed to authorities' terms, Libra will turn into another electronic payment service, which has nothing to do with cryptocurrencies. It's important to understand one thing: Mark Zuckerberg will not be able to wear two hats at the same time, he will have to weigh the pros and cons."
Roger Ver, Bitcoin.com Founder & CEO
"Facebook’s massive reach and network effect will be its biggest advantage in entering the crypto currency space."
Michael Chobanian, Kuna Founder & CEO
"Libra is declared as a stablecoin, and, of course, its competitors are the existing projects — Tether, TrueUSD, USD Coin and EURS. It's important to understand that the currency from Facebook is not a cryptocurrency at all, but a derivative of fiat money, a "centralized entity." I'm very optimistic about this project.
This is the stage between decentralized cryptocurrencies and the fiat world. For exchanges it's an alternative to banks, for people it's an easy way to enter the crypto industry. The idea was in the air, and I expected such a decision a year ago. Central banks and banks will not surrender without a fight.
Nevertheless, cryptocurrency is money for the digital economy, and the Libra Foundation includes almost all of its prominent representatives. The American digital economy has created its own Fed. As for regulators, Facebook will still have to deal with them: there is a FATF, there are authorities who want to control everything. One way or the other, this is an interesting story."
Jason Rockwood, General Manager of VeChain North America
"Much like a fiat currency issued by a central bank, a stable coin depends on the trust placed in the issuing entity. Despite being well-known, the leading stable coin continues to be surrounded in controversy largely because of a lack of public trust and transparency. Facebook's Libra, on the other hand, has a real market advantage in that it's being issued by a household name, with billions of users, and subject to intense regulatory scrutiny. These qualities increase trust and will work in Libra's favor to drive adoption."
Jennifer Chow, OKEx PR Manager
"The Libra project indeed generated a lot of anticipation in the crypto community. OKEx wallet will also support Libra in the future, together with the support of the ten stable coins such as USDK, USDT and TUSD.If Libra is approved by regulators, this will be the first time that billions of users around the world expose to cryptocurrencies and the broader crypto ecosystem in real. This would a big step forward for the whole industry. But also, they will also face a lot of competition from the current stablecoin market. In the past year, we see the trading volumes of stablecoin have gone up enormously in the digital asset market, drawing in a great deal of capital into the crypto ecosystem. Fiat-collateralized stablecoins still perform the best in terms of trading volume and their stability - due to their low volatility. Although USDT is leading the market, in the meantime, they are facing many criticism in terms of compliance and transparency. New stablecoins with higher standard in compliance, security and transparency, USDK – recently launched by OKLINK and PrimeTrust, will soon change the current stablecoins market. With growing demand from regulators, increasing competition in the stablecoin market and more scrutiny placed on cryptoasset markets in general, it’s clear that compliance and transparency will be the key factors for the next phase of the evolution of stablecoins. Libra too will face these regulatory hurdles."
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