According to a recent report published by The New York Times, Facebook is planning to launch a cryptocurrency for its WhatsApp userbase. By doing so, the movement of money within a country and across the globe can be made easier for the general public. Besides Facebook, messaging giants Telegram and Signal are also reportedly targeting to launch their own cryptos. For banks, this news comes off as a huge “RED ALERT” and here’s everything you need to know how this will change the entire crypto image.
Straight off the bat, this move taken by Facebook targets the remittance industry. In the current frameworks provided by outlets like Western Union, the cost associated with sending money across borders is too slow and too expensive. Sending money across the globe even takes days through these traditional frameworks. If a global framework is provided by WhatsApp which is powered by cryptos, the entire remittance framework of the world can be changed. So, for the remittance industry, of which banks are an integral part, Facebook’s coin is a huge red alert.
When it comes to the banks, we recently saw the Venezuela fiasco took place as the Bank of England refused to give back the gold held by it in its custody, owned by Venezuela. If it was cryptos, things would not have been this difficult for Venezuela owing to the aspect of decentralization, with no single party being in control as seen in the case of banks, and they are much easy to liquidate.
SEE ALSO: Bitcoin is Not Harnessing, It’s Replacing Western Union & Remittance Industry
Cryptos have emerged poised against the traditional financial system of the world that has been put in place by the banks. The economic recession of 2008 created the ripple that resulted in the tide of cryptos. But since their eruption, the connotation attached with bitcoin, the world’s leading cryptocurrency, and other coins has largely been negative in the media and in the eyes of the general public. The bad image that is associated with cryptos is due to the illegal activities linked with them such as money laundering, usage by criminals, and usage in the dark web (an online marketplace for illegal activities like drug selling and buying, child pornography and much more dangerous things).
SEE ALSO: JPM Coin is a ‘Failed’ Attempt to Redefine the Ideology of Bitcoin & Cryptos
With Facebook’s crypto coin, the possibilities offered by cryptos apart from their negative usage will be put out in the open in front of everyone. The public which has not been able to get in touch with cryptos will get its first taste of the crypto world. Faster global transactions at much lower costs and ease of use in terms of money handling will help masses get aware of the ease offered by cryptos. With this, the shortcomings associated with the banking system, through which global transactions often take days to complete along with heavy transaction fees, will be exposed. People will get more aware of the overheads involved with banking in the form of taxes unnecessary heavy transaction fees. As promoted by the well-renowned crypto expert Anthony Pompliano, the movement “Long Bitcoin, Short the Bankers” will get stronger.
Estonia just ordered the Danske Bank branch to close that was involved in one of the largest money laundering schemes in history.
The majority of criminals aren’t using Bitcoin to launder money, they’re using US dollars.
Long Bitcoin, Short the Bankers!
But the coin being launched by WhatsApp will also have to deal with its regulatory framework. If exchanges are going to handle the transactions of WhatsApp coin and there is no filter put in place by the parent company, criminals will likely find their way to use this currency in order to perform illegal activities. Solving this puzzle will be a challenge for Facebook.
SEE ALSO: JPM Coin is a ‘Bargain Before Death’ of Financial Institutions
Overall, the wave of trust which has largely been on the banking side will shift towards cryptos after mainstream exposure of their capabilities. Seeing cryptos in the action will trigger more of its adoption and as a result, even more capital will be flowing into this space than ever before. The technology of blockchain which has been underlying the world bitcoin and cryptos will also get even more highlighted. This is also the exact technology lying behind the idea of decentralization, removing the control of a central controlling party from any framework. The wave of decentralization will get more intense as a by-product. Facebook, in this regard, is already looking into exploring the blockchain tech for improving its login mechanism through Facebook connect. The idea is to handle the privacy concerns linked to Facebook’s data handling.
SEE ALSO: Can Facebook Connect on Blockchain Save Zuckerberg?
As of now, the idea of Facebook’s coin is being kept limited to the WhatsApp user base only. But if Facebook, which is an advertisement-based platform, decides to incorporate a crypto framework in its economic model as well, things could change drastically for the content creators on the platform. Just like Brave, which uses the Basic Attention Token (BAT) for its economic workflow, if a crypto framework is established for the users, publishers, and advertisers, overheads costs caused by middlemen ad-exchanges can be taken out of the picture completely improving the experience of the platform for everyone. For now, we’ll have to wait and see if Facebook ever decides to do so.
Social media giant Facebook, which had 2.27 billion monthly active users in the third-quarter of 2018, adopting cryptos will be counted as one of the major milestones in the digital currency arena. If Facebook coin launches anytime soon providing efficient worldwide financial services, banks need to be afraid. Very afraid. A strong crypto wave is already on its way!
KPMG joins hand with techies for blockchain solutions
KPMG, part of the big four accounting companies is now collaborating with tech companies including Tomia, Microsoft, and R3 to provide a blockchain-based solution for 5G network services. Hard data issues to be resolved.
KPMG officially announced in a blog post that it will be joining hands with Tomia, Microsoft, and R3 to create a blockchain-based settlements solution for the telecom industry. This is seen due to the anticipation of upcoming 5G services.
The blockchain system will utilize smart contracts to reduce conflicts between carriers and mobile operators. This contracts would carry critical information like correct rates, destination, and bilateral deal information. These blockchain-based solutions would result in faster and cheaper arrangements and cut down the need to outsource settlements.
Blockchain over manual
Arun Ghosh, Blockchain Leader at KPMG, addressed in a blog post, ” While we will be able to consume more data more quickly and across more locations than ever before in this next wave of telecom advancement, it is becoming increasingly complex for telecom companies to track and settle interchange fees.”
As per the current situation, settlements and reconciliations are currently handled manually and can take up to a month to complete as a huge amount of data is generated is around mobile devices including the metadata.
$31 billion revenue
As per the blogpost international mobile data roaming revenues are expected to reach $31 billion in 2022, with an average annual growth rate of 8%. Ghosh elaborated, ”While we will be able to consume more data more quickly and across more locations than ever before in this next wave of telecom advancement, it is becoming increasingly complex for telecom companies to track and settle interchange fees.”
In the proposed business setup, KPMG would handle the design and execution lead, Microsoft would be the primary architect, while R3’s Corda acts as the backbone of the operation, and TOMIA brings a layer of telecom expertise through representing 40-odd global operators.
ETH/USD technical analysis: Ethereum bleeds below $200 as US senate frowns at Facebook’Libra
- The cryto market is bleeding as Facebook’s libra may face legal issues.
- ETH is under strong selling pressure now below the $200 mark
Breaking: Bitcoin tumbles under $10,000 as U.S. Senate mulls Facebook’s Libra
ETH/USD daily chart
The July’s selloff keeps going as the market trades below the $200 mark and the 50 and 100 SMAs. Cryptocurrencies are dropping on the back of potential legal and privacy issues with Facebook’s Libra.
ETH/USD 4-hour chart
The market is seen as weak below 220 resistance and its main SMAs. The level to beat for bears is 180 followed by 120 on the way down.
Additional key levels
|Today last price||198.54|
|Today Daily Change||-29.55|
|Today Daily Change %||-12.96|
|Today daily open||228.09|
|Previous Daily High||235.48|
|Previous Daily Low||202.87|
|Previous Weekly High||318.46|
|Previous Weekly Low||262|
|Previous Monthly High||363.54|
|Previous Monthly Low||226.48|
|Daily Fibonacci 38.2%||223.02|
|Daily Fibonacci 61.8%||215.32|
|Daily Pivot Point S1||208.81|
|Daily Pivot Point S2||189.53|
|Daily Pivot Point S3||176.2|
|Daily Pivot Point R1||241.42|
|Daily Pivot Point R2||254.76|
|Daily Pivot Point R3||274.03|
Facebook’s Libra Should Be Regulated Like a Security, Says Former CFTC Chair
Libra is a security, says a former Commodity Futures Trading Commission (CFTC) chairman in prepared remarks to the U.S. House of Representatives.
Gary Gensler, who chaired the CFTC from 2009 to 2014 and previously held leadership roles at the U.S. Treasury Department, says in written testimony that Facebook’s new cryptocurrency project looks like an investment vehicle and that Libra may even resemble some banking structures.
Gensler will testify before the House Financial Services Committee on Wednesday, as part of a panel of expert witnesses on the potential implications of Libra. He will join Public Citizen president Robert Weissman, Columbia University law professor Katharina Pistor and Georgetown University law professor Chris Brummer.
In Gensler’s remarks, obtained by CoinDesk, he describes how the Libra cryptocurrency might be classified as a security.
At the heart of his argument is Libra’s structure: Libra itself is intended to act as a kind of stablecoin, with its value pegged to a basket of sovereign currencies and government bonds. Members of the Libra Association, the governing council charged with overseeing the cryptocurrency’s ongoing development after it launches, will receive a Libra investment token – a security token, as Facebook has acknowledged.
Collateral earned on the basket of currencies backing Libra (referred to as the Libra Reserve) will go to holders of the investment token, according to documentation Facebook published about the project last month.
Gensler argues this means Libra itself looks like a security, saying:
“As currently proposed, the Libra Reserve, in essence, is a pooled investment vehicle that should at a minimum, be regulated by the Securities and Exchange Commission (SEC), with the Libra Association registering as an investment advisor.”
‘Pooled investment vehicle’
According to Gensler, Libra is a security for the same reasons that the Libra Investment Token is a security.
There may be debates on whether and how Libra qualifies as a security under the Investment Company Act of 1940, the Howey Test, or the “Reves Family Resemblance Test,” but none of these are strictly important for this analysis, he argues, explaining:
“It’s unambiguous that [the Libra Investment Token] is a security as it will receive a net return based upon interest on the Libra Reserve.”
In Gensler’s view, the actual Libra token is “part of the same pooled investment vehicle,” and therefore faces the same market risks as the investment token.
The SEC is already considering whether Libra could be considered a security, and therefore falls under its purview, according to a Wall Street Journal report.
“Further, investor protection will be just as important for the proposed Libra token as it is for investors in international bond funds or in commodity ETFs such as gold, silver, or oil ETFs,” Gensler says. “I also believe that each Authorized Reseller of the Libra token would need to be a registered broker dealer.”
He describes holders of Libra as a “2nd class of investors” in the Libra Reserve.
Securities concerns aside, aspects of Libra’s setup also may fall under banking regulations, Gensler adds.
The Libra Reserve is effectively proposing “a private form of money” which can be used for payments, storing value and lending “the proceeds to banks (as deposits) and governments (as debt securities),” he says.
These applications are similar to services offered by banks.
“Thus, there is some basis to consider the Libra Reserve as a bank or to apply bank-like regulation to it,” Gensler proposes. “At a minimum there should be restrictions on Libra Reserve’s investments and prohibition on its ability to lend or operate as a fractional bank.”
(It’s worth noting there’s actually precedent for a stablecoin issuer operating as a fractional bank: Tether.)