Facebook’s cryptocurrency Libra is going to have a significant impact on global economies and financial industries, says Binance.
Market research by the world’s biggest cryptocurrency exchange by volume reveals that the impact will be both in the medium and long term. At the same time, it says the success of the Facebook cryptocurrency will depend on how much the company can persuade financial institutions and regulators around the world.
Facebook will have to convince them to establish “an agile framework that satisfies the need for decentralised governance while being compliant with existing domestic and international regulations,” the report says. This is especially important for India, which has maintained a strict stance against virtual money.
As per a report, the draft Banning of Cryptocurrency and Regulation of Official Digital Currency Bill, 2019 proposes a 10-year imprisonment for buying and selling crypto currencies. The 'non-bailable' offence is applicable for those who “mine, generate, hold, sell, transfer, dispose, issue or deal in cryptocurrencies directly or indirectly”.
The Binance report mentions that, to become successful, Facebook must scale the user-base for Libra and build trusted partnerships with the financial institutions that will form the consortium. The Libra foundation must also work independently of Facebook to gain people’s trust.
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The review also suggests that the project should operate “in a similar manner as the existing separation between monetary policy and fiscal policy that occurs in developed countries.”
While Binance believes that Libra’s groundwork is 'extensive and well thought-out', there are certain uncertainties around the project. It is unclear “how the network may provide priority settlement to human-generated peer-to-peer transactions over programmatic smart contracts that may congest or flood the network,” the review adds.
It wonders how much participants will be rewarded and if Facebook may try to allow access to Libra without internet access as a part of its Internet.org initiative. It is also unclear what kind of 'Layer-2' apps will be built on Libra.
The complete Libra white paper is now available on its official website.
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