FAQ About Libra: Everything You Need To Know About Cryptocurrency By Facebook Fixed
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Although there are variations of virtual currency called cryptocurrency, the one most people have heard about before is Bitcoin. They are all based on the concept of blockchain. A blockchain is a distributed computer file that can be read by people across many computers. There is not one entity with control over the file. Blockchains contain encoded information that can't be changed unless a user has a key that corresponds to the \"block\" in the chain they want to update. These changes get replicated across the chain. Blockchains are highly secure and publicly viewable. Cryptocurrency is a currency that uses a mathematical blockchain to track exchanges and value, rather than a central bank.
The Fed chair fielded multiple questions about Facebook's ambitions from members of the House Financial Services Committee as part of a semiannual report to Congress, which was supposed to focus on monetary policy. When asked by Rep. Maxine Waters, D-Calif., chairwoman of the House Financial Services Committee, about regulatory oversight of the global cryptocurrency project, Powell said the approach should be a \"careful one, not a sprint to implementation.\"
The Facebook proposal to create a new cryptocurrency as part of its broader Libra project raises profound questions about national sovereignty, corporate power, consumer protection, competition policy, monetary policy, privacy and more. The U.S. regulatory system is not prepared to address these questions. Nor are the regulatory systems of other nations or international institutions.
According to Facebook, there are about 1.7 billion adults who have zero or limited access to a bank or financial system. It added that with a stable cryptocurrency, getting access to a financial system will no longer be a problem.
Second, issuers of stablecoins designed to facilitate consumer payments must clearly demonstrate how consumer protections would be assured. Consumers will need to be educated on how their rights differ with respect to digital wallets compared to bank accounts. In the United States, as elsewhere, statutory and regulatory protections have been implemented with respect to bank accounts so that consumers can reasonably expect their deposits to be insured up to a limit; fraudulent transactions to be the liability of the bank; transfers to be available within specified periods; and clear, standardized disclosures about account fees and interest payments. Not only is it not clear whether comparable protections will be in place with Libra, or what recourse consumers will have, but it is not even clear how much price risk consumers will face since they do not appear to have rights to the stablecoin's underlying assets. Consumers need to be cautioned that stablecoins are likely to be starkly different from sovereign-issued currency in legal terms. It will be important to get clarity on what legal entity can be held responsible for the security of personally identifiable information and transaction data and how personal data will be stored, accessed, and used. The large number of cyber breaches in the last few years highlight the importance of these issues.
Singapore is one of the few countries that have ostensibly held discussions with Facebook about its upcoming Libra cryptocurrency. According to Ravi Menon, the managing director of the Monetary Authority of Singapore (MaS), Libra wields a number of potential benefits, such as making payments cheaper or supporting the unbanked. 153554b96e