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Wikipedia

Diem (digital currency)

April 12, 2024

Diem (formerly known as Libra) was a permissioned blockchain-based stablecoin payment system proposed by the American social media company Facebook. The plan also included a private currency implemented as a cryptocurrency.

Diem
Diem's logo
Denominations
Symbol≋
Development
White paperDiem whitepaper
Initial releaseCancelled[1]
Code repositorygithub.com/diem/diem
Development statusAnnounced
Written inRust
Developer(s)Diem Association
Source modelOpen source
LicenseApache License 2.0[2]
Website
Websitediem.com

The launch was originally planned to be in 2020,[3][4] but only rudimentary experimental code was released.[5]

The project, currency and transactions would have been managed and cryptographically entrusted to the Diem Association, a membership organization of companies from payment, technology, telecommunication, online marketplace and venture capital, and nonprofits.

Before December 2020, the project was called "Libra", although this was changed to Diem following legal challenges regarding its name and logo.[6][4]

The project generated backlash from government regulators in the European Union, the USA, other countries, and among the general public over monetary sovereignty, financial stability, privacy, and antitrust concerns which ultimately helped kill the project.[7]

The Diem Association (originally the Libra Association) shut down in January 2022 and sold the project to Silvergate Bank. Silvergate wrote off their Diem investment in January 2023.

History edit

Morgan Beller started working on cryptocurrency and blockchain at Facebook in 2017, and was initially the only person working on Facebook's blockchain initiative.[8]

Facebook vice president David A. Marcus moved from Facebook Messenger to a new blockchain division in May 2018.[9] First reports of Facebook planning a cryptocurrency, with Marcus in charge, emerged a few days later.[10] By February 2019, there were more than 50 engineers working on the project.[11] Confirmation that Facebook intended a cryptocurrency first emerged in May 2019.[12] At this time it was known as "GlobalCoin" or "Facebook Coin".[13]

The project was formally announced on June 18, 2019, under the name Libra.[14][15] The creators of the coin are listed as Morgan Beller, David Marcus and Kevin Weil (Novi's VP of Product).[8] The first release was planned for 2020.[4]

On July 15, 2019, Facebook announced the currency would not launch until all regulatory concerns have been met and Libra had the "appropriate approvals".[16] On September 18, 2019, during a meeting with top Senate Democratic leaders, Mark Zuckerberg said that Libra would not be launched anywhere in the world without first obtaining approval from United States regulators.[17] In October 2019 multiple companies left Libra Association: PayPal left on 4 October,[18] eBay, Mastercard, Stripe, Visa and Mercado Pago followed on 11 October,[19][20] and Booking Holdings on 14 October.[21]

According to a November 2020 report in the Financial Times, Libra will be launching a slimmed down plan that includes the cryptocurrency being a stablecoin backed by the US dollar rather than a multiple currency collection. The newspaper also reported that the cryptocurrency will now be called Diem, which is Latin for "day".[22] In December 2020, Libra was rebranded as Diem, and Libra Association renamed Diem Association. As of December 2020, Diem Association had 27 members.[22]

In January 2022, it was reported that the Diem Association was winding down, with Diem's assets being sold to the California based Silvergate Capital for a reported $200 million.[23][24] Facebook was also reported to have planned to launch the token in the U.S. with it being issued by Silvergate although the Federal Reserve and the United States Department of the Treasury were not supportive of the project.[25][26]

In January 2023, Silvergate announced in their earnings call for Q4 2022 that they were writing down their entire investment in Diem.[27] Silvergate Bank was shut down in March 2023.[28]

Currency edit

The plan for the Libra token was to be backed by financial assets such as a basket of currencies,[29] and US Treasury securities in an attempt to avoid volatility.[30] Facebook announced that each of the partners would inject an initial US$10 million, so Libra had full asset backing on the day it opened.[31] As of January 2020, Libra is said to have dropped the idea of a mixed currency basket in favor of individual stablecoins pegged to individual currencies.[32]

Libra service partners, within the Libra Association, will create new Libra currency units based on demand.[31] Libra currency units will be retired as they are redeemed for conventional currency.

Initial reconciliation of transactions will be performed at each service partner, and the blockchain's distributed ledger will be used for reconciliation between service partners.[33] The intent is to help prevent everyone but members of the Libra Association from trying to extract and analyze data from the distributed ledger.

In contrast to cryptocurrencies such as bitcoin which use permissionless blockchains, Libra is not decentralized, relying on trust in the Libra Association as "a de facto central bank".[34]

In September 2019, Facebook announced that the reserve basket would be made up of: 50% United States dollar, 18% Euro, 14% Japanese yen, 11% Pound sterling and 7% Singapore dollar.[35]

Libra considered using coins based on individual national currencies on the network, alongside the basket-based Libra token. This was first mooted publicly by David Marcus in October 2019,[36] and by Mark Zuckerberg in his October 2019 Senate testimony.[37] The idea was promoted again in March 2020.[38]

On April 16, 2020, Libra announced plans to create an infrastructure for multiple cryptocurrencies, the preponderance of which will be backed by individual fiat currencies, and said the association was in talks with regulators from Switzerland for a payments license.[39]

In May 2021, Diem announced that it had withdrawn its application to the Swiss Financial Market Supervisory Authority and said that it would instead seek approval with the US treasury to register as a money services business.[40]

Diem Association edit

Facebook established the Libra Association (later renamed to Diem Association) to oversee the currency, founded in Geneva, Switzerland.[41] As of December 2020, Diem Association includes:

Seven other companies had been named as Libra Association members in the initial June 2019 announcement, but left before the first Libra meeting on 14 October 2019: Booking Holdings, eBay, Mastercard, Mercado Pago, PayPal, Stripe and Visa Inc. Visa chairman and CEO Alfred F. Kelly clarified in July that Visa had not joined, but had signed a nonbinding letter of intent; and that "no one has yet officially joined." He said that factors determining whether Visa would, in fact, join included "the ability of the association to satisfy all the requisite regulatory requirements."[45] Vodafone joined the association in October 2019, but left in January 2020, saying they preferred to work on their mobile banking subsidiary M-Pesa.[46]

Press coverage around the initial Libra announcement noted the absence of Apple Pay, Google Pay, Amazon and of any banks.[47][48][49] Banking executives had been reluctant to join due to uncertainties surrounding regulation and feasibility of the scheme.[50]

In late February 2020, e-commerce site Shopify[51] and cryptocurrency brokerage Tagomi[52] joined.

The association hopes to grow to 100 members with an equal vote.[53]

In late April 2020, the payment processing company, Checkout.com, announced they would be joining the association.[54] In May 2020, Singapore state investor Temasek Holdings, cryptocurrency investor Paradigm and private equity firm Slow Ventures announced they would join the association.[55]

Libra Association was renamed to Diem Association on December 1, 2020, as part of the rebranding from Libra to Diem.[56]

Reception edit

The project faced criticism[47][57] and opposition from central banks.[58] The use of a cryptocurrency and blockchain for the implementation was questioned.[42]

European Union regulatory response edit

The first regulator response to Libra came within minutes of the launch announcement, from French Finance Minister, Bruno Le Maire, who was being interviewed on French radio station Europe 1. He said that Libra could not be allowed to become a sovereign currency, and would require strong consumer protections.[59]

Le Maire then warned the French Parliament of his concerns about Libra and privacy, money laundering and terrorism finance. He called on the central bank governors of the Group of Seven to prepare a report on Facebook's plans.[58]

Bank of England governor Mark Carney said there was a need to keep an "open mind" about new technology for money transfers, but "anything that works in this world will become instantly systemic and will have to be subject to the highest standards of regulation."[58]

German MEP Markus Ferber warned that Facebook could become a shadow bank.[58] His colleague MEP Stefan Berger sees Libra's power potential as a threat to the economic stability of the euro zone and its democracies: Libra could make Facebook its central bank. Berger argues in favor of the development of a European stablecoin in order to be able to offer a secure alternative to the Facebook currency.[60] Berger will be in charge of the European report of Markets in Crypto-Assets (MiCA) which will serve as base for a regulatory framework for crypto-assets.[61]

On September 13, 2019, Le Maire stated that France would not allow development of Libra in the European Union, as would be a threat to the monetary sovereignty of states. He also spoke about the potential for abuse of marketing dominance and systemic financial risks as reasons for not allowing stablecoins to operate yet within the EU.[62]

According to a Reuters report, German Finance Minister Olaf Scholz said following a video conference of G7 finance ministers that Germany and Europe cannot accept Diem currency entry into the market while the regulatory risks are not adequately addressed.[63] Scholz stated that he does not support private-sector digital currencies, and his remarks could be detrimental to Diem and JPMorgan Coin.

Valdis Dombrovskis, Executive Vice-President of the European Commission for An Economy that Works for People, stated at the Digital Finance Outreach 2020 Closing Conference that the European Union is preparing a new cryptocurrency regime that may include stricter requirements for "global stablecoin" projects like Libra.[64] In addition, Dombrovskis stated in his address that stablecoins that function on a global scale can "present new concerns" — they can disturb financial and monetary stability.

United States regulatory response edit

US regulators and politicians expressed concerns within hours of the mid-2019 announcement. Maxine Waters, Chairperson of the United States House Committee on Financial Services Committee asked Facebook to halt the development and launch of Libra, citing a list of recent scandals and that "the cryptocurrency market currently lacks a clear regulatory framework".[65] The U.S. House Committee on Financial Services Democrats sent a letter to Facebook asking the company to stop development of Libra, citing concerns of privacy, national security, trading, and monetary policy.[66]

Jerome Powell, chairman of the Federal Reserve, testified before Congress on 10 July 2019 that the Fed had "serious concerns" as to how Libra would deal with "money laundering, consumer protection and financial stability."[67]

President Donald Trump tweeted on 12 July 2019 that "If Facebook and other companies want to become a bank, they must seek a new Banking Charter and become subject to all Banking Regulations."[68]

US regulators contacted Visa, PayPal, Mastercard and Stripe, asking for a complete overview of how Libra would fit into their anti-money-laundering compliance programs.[69]

Since several participants left the project in late 2019, the Libra Association worked to address concerns from United States regulators with the development of a "Libra 2.0" blueprint.[51]

According to CNBC, in 2021, Diem reportedly withdrawn its application for a Swiss payment license, intending to instead move its activities to the United States. Diem announced that it would relocate its operating headquarters from Geneva to Washington with an intend to establish its payment system from the United States.[70]

Other countries edit

David Marcus told the US Senate that the Swiss Federal Data Protection and Information Commissioner would oversee privacy for Libra, but the commissioner said that it had not heard from Facebook at all.[71]

The government of Japan began the process of investigating Libra and doing an analysis on the effect on Japan's monetary policy and financial regulation. In July 2019, Japanese officials formed a working committee, consisting of the Bank of Japan, the Ministry of Finance and the Financial Services Agency, to coordinate policies to address Libra's impact on regulation, monetary policy, tax, and payments settlement.[72] The working group will coordinate measures to handle Libra's influence on regulation, monetary policy, tax, and payments settlement. This will be done before the Group of Seven meeting in France between 24 and 26 August 2019.[73][needs update]

Data protection regulators internationally issued a statement[74] asking Facebook to protect personal data of users, and to detail Libra's planned practices for handling personal data, in the light of "previous episodes where Facebook's handling of people's information has not met the expectations of regulators, or their own users."[75]

Finance Watch describes Libra as a "huge risk to public monetary sovereignty"[76] and "concludes that Libra is a bad idea – for its users, for the stability of our financial system, and last but not least for our democracy."[77]

On September 16, 2019, officials from the Libra consortium, including J.P. Morgan and Facebook, met with officials from 26 central banks, including the Federal Reserve and Bank of England, in Basel, Switzerland and the meeting was chaired by European Central Bank board member Benoît Cœuré, a vocal Libra critic.[78]

Privacy concerns edit

Industry observers have speculated whether Libra will provide meaningful privacy to its users.[79] Facebook's plan is to let its subsidiary Novi Financial manage Libra for Facebook users, and Facebook executives have stated that Novi will not share account holder's purchase information with Facebook without authorization.[80] However, the system is also planned to include a friend-finder search function, and the use of this function will constitute permission for Novi to combine the account holder's transaction history with their Facebook account.[33]

In August 2019, according to CNBC, top data protection officials including Democratic FTC commissioner Rohit Chopra, U.K. Information Commissioner Elizabeth Denham, EU Data Protection Supervisor Giovanni Buttarelli, and other top regulators from Australia, Canada, Albania, and Burkina Faso in a joint statement expressed doubts over Facebook's proposed digital currency project Libra (Diem).[81] According to CNBC, Facebook confirmed that governments and regulators throughout the world were scrutinizing Libra.[81]

In general, consumer advocates and public interest groups have opposed Diem on privacy grounds and rejected the tethering of financial services to mass surveillance.[82]

Antitrust concerns edit

Scholars have highlighted several antitrust risks associated with Diem, namely, a risk of collusion between association members, a risk of tying between Diem and Novi, and a risk of exclusivity agreements if Novi is required to use Diem within Facebook environment.[83]

Fake Libra websites edit

Facebook tries to police inaccurate information and fake Libra websites on its platform.[84] According to The Washington Post, nearly a dozen fake accounts, pages, and groups on Facebook and Instagram advertised themselves as legitimate centres for the Libra digital currency, in some cases trying to sell discounted Libra which was not yet accessible. Numerous of the counterfeits used the Facebook logo, images of Facebook CEO Mark Zuckerberg, and Libra's official marketing material. The growth of fake pages and groups devoted to Libra added to Facebook's difficulties with global authorities.[85]

Legal issues edit

Diem Association (formerly Libra Association) faced legal challenges as both the name and the logo of the digital currency are already in use within different territories.

Finco Services Inc filed a lawsuit with New York Southern District Court against Facebook, Inc., Novi Financial, Inc., Jlv, LLC and Character SF, LLC for an alleged trademark infringement[86] arising out of the use by the latter of a logo similar to the start-up bank operated by Finco Services, Inc. The plaintiff requested a preliminary and permanent injunctive relief as well as monetary relief from the defendants.[87] A settlement conference in this matter is scheduled for March 26, 2020 in the United States Courthouse, while the parties did not consent to conducting the proceedings before a magistrate judge and requested to be tried to a jury.[88]

In Europe, Libra Association filed an application with the European Union Intellectual Property Office for the registration of the word "LIBRA" as a verbal trademark. The proceeding already received five oppositions to registration from four European companies based mainly on the alleged likelihood of confusion with their prior trademarks.[89] The opposing companies are Lyra Network, Libra Internet Bank, Libri GmbH and Advanced New Technologies Co., Ltd. In April 2020, the parties will reach the adversarial part of the opposition proceedings, unless a settlement is reached during the cooling-off period.

Implementation edit

Blockchain consensus edit

Diem will not rely on cryptocurrency mining.[42] Only members of Diem Association will be able to process transactions via the permissioned blockchain.

Diem hopes to begin transitioning to a permissionless proof-of-stake system within five years;[15] although their own materials admit that no solution exists "that can deliver the scale, stability, and security needed to support billions of people and transactions across the globe through a permissionless network."[90][5]

Software edit

Diem source code is written in Rust and published as open source under the Apache License on GitHub.

In June 2019, Elaine Ou, an opinion writer at Bloomberg News, tried compiling and running the publicly released code for Libra. At the time, the software did little more than allow fake coins to be put in a wallet; almost none of the functionality outlined in the white paper was implemented, including "major architectural features that have yet to be invented." Ou was surprised that Facebook "would release software in such a state".[5]

Digital wallet edit

In June 2019, Facebook announced plans to release a digital wallet called Calibra in 2020, as a standalone app and also to integrate it within Messenger and WhatsApp.[3] In May 2020, Calibra was renamed Novi.[91] As of February 2021, Novi and Diem were not released yet and do not have a set release date.[1]

Move edit

Move was the Diem blockchain's proposed smart contract and custom transactions language. It was planned to be a statically-typed programming language, compiled to bytecode.

The Move language syntax was never released. An example Intermediate representation of the language is shown in the Move white paper:[92]

public main(payee: address, amount: u64) {  let coin: 0x0.Currency.Coin = 0x0.Currency.withdraw_from_sender(copy(amount));  0x0.Currency.deposit(copy(payee), move(coin)); }

See also edit

References edit

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External links edit

  • Official website  

April 12, 2024
diem, digital, currency, diem, formerly, known, libra, permissioned, blockchain, based, stablecoin, payment, system, proposed, american, social, media, company, facebook, plan, also, included, private, currency, implemented, cryptocurrency, diemdiem, logodenom. Diem formerly known as Libra was a permissioned blockchain based stablecoin payment system proposed by the American social media company Facebook The plan also included a private currency implemented as a cryptocurrency DiemDiem s logoDenominationsSymbol DevelopmentWhite paperDiem whitepaperInitial releaseCancelled 1 Code repositorygithub com diem diemDevelopment statusAnnouncedWritten inRustDeveloper s Diem AssociationSource modelOpen sourceLicenseApache License 2 0 2 WebsiteWebsitediem wbr comThe launch was originally planned to be in 2020 3 4 but only rudimentary experimental code was released 5 The project currency and transactions would have been managed and cryptographically entrusted to the Diem Association a membership organization of companies from payment technology telecommunication online marketplace and venture capital and nonprofits Before December 2020 the project was called Libra although this was changed to Diem following legal challenges regarding its name and logo 6 4 The project generated backlash from government regulators in the European Union the USA other countries and among the general public over monetary sovereignty financial stability privacy and antitrust concerns which ultimately helped kill the project 7 The Diem Association originally the Libra Association shut down in January 2022 and sold the project to Silvergate Bank Silvergate wrote off their Diem investment in January 2023 Contents 1 History 2 Currency 3 Diem Association 4 Reception 4 1 European Union regulatory response 4 2 United States regulatory response 4 3 Other countries 4 4 Privacy concerns 4 5 Antitrust concerns 4 6 Fake Libra websites 5 Legal issues 6 Implementation 6 1 Blockchain consensus 6 2 Software 6 3 Digital wallet 6 4 Move 7 See also 8 References 9 External linksHistory editMorgan Beller started working on cryptocurrency and blockchain at Facebook in 2017 and was initially the only person working on Facebook s blockchain initiative 8 Facebook vice president David A Marcus moved from Facebook Messenger to a new blockchain division in May 2018 9 First reports of Facebook planning a cryptocurrency with Marcus in charge emerged a few days later 10 By February 2019 there were more than 50 engineers working on the project 11 Confirmation that Facebook intended a cryptocurrency first emerged in May 2019 12 At this time it was known as GlobalCoin or Facebook Coin 13 The project was formally announced on June 18 2019 under the name Libra 14 15 The creators of the coin are listed as Morgan Beller David Marcus and Kevin Weil Novi s VP of Product 8 The first release was planned for 2020 4 On July 15 2019 Facebook announced the currency would not launch until all regulatory concerns have been met and Libra had the appropriate approvals 16 On September 18 2019 during a meeting with top Senate Democratic leaders Mark Zuckerberg said that Libra would not be launched anywhere in the world without first obtaining approval from United States regulators 17 In October 2019 multiple companies left Libra Association PayPal left on 4 October 18 eBay Mastercard Stripe Visa and Mercado Pago followed on 11 October 19 20 and Booking Holdings on 14 October 21 According to a November 2020 report in the Financial Times Libra will be launching a slimmed down plan that includes the cryptocurrency being a stablecoin backed by the US dollar rather than a multiple currency collection The newspaper also reported that the cryptocurrency will now be called Diem which is Latin for day 22 In December 2020 Libra was rebranded as Diem and Libra Association renamed Diem Association As of December 2020 Diem Association had 27 members 22 In January 2022 it was reported that the Diem Association was winding down with Diem s assets being sold to the California based Silvergate Capital for a reported 200 million 23 24 Facebook was also reported to have planned to launch the token in the U S with it being issued by Silvergate although the Federal Reserve and the United States Department of the Treasury were not supportive of the project 25 26 In January 2023 Silvergate announced in their earnings call for Q4 2022 that they were writing down their entire investment in Diem 27 Silvergate Bank was shut down in March 2023 28 Currency editThe plan for the Libra token was to be backed by financial assets such as a basket of currencies 29 and US Treasury securities in an attempt to avoid volatility 30 Facebook announced that each of the partners would inject an initial US 10 million so Libra had full asset backing on the day it opened 31 As of January 2020 Libra is said to have dropped the idea of a mixed currency basket in favor of individual stablecoins pegged to individual currencies 32 Libra service partners within the Libra Association will create new Libra currency units based on demand 31 Libra currency units will be retired as they are redeemed for conventional currency Initial reconciliation of transactions will be performed at each service partner and the blockchain s distributed ledger will be used for reconciliation between service partners 33 The intent is to help prevent everyone but members of the Libra Association from trying to extract and analyze data from the distributed ledger In contrast to cryptocurrencies such as bitcoin which use permissionless blockchains Libra is not decentralized relying on trust in the Libra Association as a de facto central bank 34 In September 2019 Facebook announced that the reserve basket would be made up of 50 United States dollar 18 Euro 14 Japanese yen 11 Pound sterling and 7 Singapore dollar 35 Libra considered using coins based on individual national currencies on the network alongside the basket based Libra token This was first mooted publicly by David Marcus in October 2019 36 and by Mark Zuckerberg in his October 2019 Senate testimony 37 The idea was promoted again in March 2020 38 On April 16 2020 Libra announced plans to create an infrastructure for multiple cryptocurrencies the preponderance of which will be backed by individual fiat currencies and said the association was in talks with regulators from Switzerland for a payments license 39 In May 2021 Diem announced that it had withdrawn its application to the Swiss Financial Market Supervisory Authority and said that it would instead seek approval with the US treasury to register as a money services business 40 Diem Association editFacebook established the Libra Association later renamed to Diem Association to oversee the currency founded in Geneva Switzerland 41 As of December 2020 Diem Association includes Payments PayU Checkout com Technology and marketplaces Facebook s subsidiary Novi Financial 42 Farfetch Spotify Shopify 43 44 Taxis Lyft Uber Telecommunications Iliad SA Blockchain Anchorage Bison Trails Coinbase Xapo Venture capital Andreessen Horowitz Breakthrough Initiatives Ribbit Capital Thrive Capital Union Square Ventures Slow Ventures Temasek Holdings Nonprofit and multilateral organizations and academic institutions Creative Destruction Lab Kiva Mercy Corps Women s World Banking Heifer InternationalSeven other companies had been named as Libra Association members in the initial June 2019 announcement but left before the first Libra meeting on 14 October 2019 Booking Holdings eBay Mastercard Mercado Pago PayPal Stripe and Visa Inc Visa chairman and CEO Alfred F Kelly clarified in July that Visa had not joined but had signed a nonbinding letter of intent and that no one has yet officially joined He said that factors determining whether Visa would in fact join included the ability of the association to satisfy all the requisite regulatory requirements 45 Vodafone joined the association in October 2019 but left in January 2020 saying they preferred to work on their mobile banking subsidiary M Pesa 46 Press coverage around the initial Libra announcement noted the absence of Apple Pay Google Pay Amazon and of any banks 47 48 49 Banking executives had been reluctant to join due to uncertainties surrounding regulation and feasibility of the scheme 50 In late February 2020 e commerce site Shopify 51 and cryptocurrency brokerage Tagomi 52 joined The association hopes to grow to 100 members with an equal vote 53 In late April 2020 the payment processing company Checkout com announced they would be joining the association 54 In May 2020 Singapore state investor Temasek Holdings cryptocurrency investor Paradigm and private equity firm Slow Ventures announced they would join the association 55 Libra Association was renamed to Diem Association on December 1 2020 as part of the rebranding from Libra to Diem 56 Reception editThe project faced criticism 47 57 and opposition from central banks 58 The use of a cryptocurrency and blockchain for the implementation was questioned 42 European Union regulatory response edit The first regulator response to Libra came within minutes of the launch announcement from French Finance Minister Bruno Le Maire who was being interviewed on French radio station Europe 1 He said that Libra could not be allowed to become a sovereign currency and would require strong consumer protections 59 Le Maire then warned the French Parliament of his concerns about Libra and privacy money laundering and terrorism finance He called on the central bank governors of the Group of Seven to prepare a report on Facebook s plans 58 Bank of England governor Mark Carney said there was a need to keep an open mind about new technology for money transfers but anything that works in this world will become instantly systemic and will have to be subject to the highest standards of regulation 58 German MEP Markus Ferber warned that Facebook could become a shadow bank 58 His colleague MEP Stefan Berger sees Libra s power potential as a threat to the economic stability of the euro zone and its democracies Libra could make Facebook its central bank Berger argues in favor of the development of a European stablecoin in order to be able to offer a secure alternative to the Facebook currency 60 Berger will be in charge of the European report of Markets in Crypto Assets MiCA which will serve as base for a regulatory framework for crypto assets 61 On September 13 2019 Le Maire stated that France would not allow development of Libra in the European Union as would be a threat to the monetary sovereignty of states He also spoke about the potential for abuse of marketing dominance and systemic financial risks as reasons for not allowing stablecoins to operate yet within the EU 62 According to a Reuters report German Finance Minister Olaf Scholz said following a video conference of G7 finance ministers that Germany and Europe cannot accept Diem currency entry into the market while the regulatory risks are not adequately addressed 63 Scholz stated that he does not support private sector digital currencies and his remarks could be detrimental to Diem and JPMorgan Coin Valdis Dombrovskis Executive Vice President of the European Commission for An Economy that Works for People stated at the Digital Finance Outreach 2020 Closing Conference that the European Union is preparing a new cryptocurrency regime that may include stricter requirements for global stablecoin projects like Libra 64 In addition Dombrovskis stated in his address that stablecoins that function on a global scale can present new concerns they can disturb financial and monetary stability United States regulatory response edit US regulators and politicians expressed concerns within hours of the mid 2019 announcement Maxine Waters Chairperson of the United States House Committee on Financial Services Committee asked Facebook to halt the development and launch of Libra citing a list of recent scandals and that the cryptocurrency market currently lacks a clear regulatory framework 65 The U S House Committee on Financial Services Democrats sent a letter to Facebook asking the company to stop development of Libra citing concerns of privacy national security trading and monetary policy 66 Jerome Powell chairman of the Federal Reserve testified before Congress on 10 July 2019 that the Fed had serious concerns as to how Libra would deal with money laundering consumer protection and financial stability 67 President Donald Trump tweeted on 12 July 2019 that If Facebook and other companies want to become a bank they must seek a new Banking Charter and become subject to all Banking Regulations 68 US regulators contacted Visa PayPal Mastercard and Stripe asking for a complete overview of how Libra would fit into their anti money laundering compliance programs 69 Since several participants left the project in late 2019 the Libra Association worked to address concerns from United States regulators with the development of a Libra 2 0 blueprint 51 According to CNBC in 2021 Diem reportedly withdrawn its application for a Swiss payment license intending to instead move its activities to the United States Diem announced that it would relocate its operating headquarters from Geneva to Washington with an intend to establish its payment system from the United States 70 Other countries edit David Marcus told the US Senate that the Swiss Federal Data Protection and Information Commissioner would oversee privacy for Libra but the commissioner said that it had not heard from Facebook at all 71 The government of Japan began the process of investigating Libra and doing an analysis on the effect on Japan s monetary policy and financial regulation In July 2019 Japanese officials formed a working committee consisting of the Bank of Japan the Ministry of Finance and the Financial Services Agency to coordinate policies to address Libra s impact on regulation monetary policy tax and payments settlement 72 The working group will coordinate measures to handle Libra s influence on regulation monetary policy tax and payments settlement This will be done before the Group of Seven meeting in France between 24 and 26 August 2019 73 needs update Data protection regulators internationally issued a statement 74 asking Facebook to protect personal data of users and to detail Libra s planned practices for handling personal data in the light of previous episodes where Facebook s handling of people s information has not met the expectations of regulators or their own users 75 Finance Watch describes Libra as a huge risk to public monetary sovereignty 76 and concludes that Libra is a bad idea for its users for the stability of our financial system and last but not least for our democracy 77 On September 16 2019 officials from the Libra consortium including J P Morgan and Facebook met with officials from 26 central banks including the Federal Reserve and Bank of England in Basel Switzerland and the meeting was chaired by European Central Bank board member Benoit Cœure a vocal Libra critic 78 Privacy concerns edit Industry observers have speculated whether Libra will provide meaningful privacy to its users 79 Facebook s plan is to let its subsidiary Novi Financial manage Libra for Facebook users and Facebook executives have stated that Novi will not share account holder s purchase information with Facebook without authorization 80 However the system is also planned to include a friend finder search function and the use of this function will constitute permission for Novi to combine the account holder s transaction history with their Facebook account 33 In August 2019 according to CNBC top data protection officials including Democratic FTC commissioner Rohit Chopra U K Information Commissioner Elizabeth Denham EU Data Protection Supervisor Giovanni Buttarelli and other top regulators from Australia Canada Albania and Burkina Faso in a joint statement expressed doubts over Facebook s proposed digital currency project Libra Diem 81 According to CNBC Facebook confirmed that governments and regulators throughout the world were scrutinizing Libra 81 In general consumer advocates and public interest groups have opposed Diem on privacy grounds and rejected the tethering of financial services to mass surveillance 82 Antitrust concerns edit Scholars have highlighted several antitrust risks associated with Diem namely a risk of collusion between association members a risk of tying between Diem and Novi and a risk of exclusivity agreements if Novi is required to use Diem within Facebook environment 83 Fake Libra websites edit Facebook tries to police inaccurate information and fake Libra websites on its platform 84 According to The Washington Post nearly a dozen fake accounts pages and groups on Facebook and Instagram advertised themselves as legitimate centres for the Libra digital currency in some cases trying to sell discounted Libra which was not yet accessible Numerous of the counterfeits used the Facebook logo images of Facebook CEO Mark Zuckerberg and Libra s official marketing material The growth of fake pages and groups devoted to Libra added to Facebook s difficulties with global authorities 85 Legal issues editDiem Association formerly Libra Association faced legal challenges as both the name and the logo of the digital currency are already in use within different territories Finco Services Inc filed a lawsuit with New York Southern District Court against Facebook Inc Novi Financial Inc Jlv LLC and Character SF LLC for an alleged trademark infringement 86 arising out of the use by the latter of a logo similar to the start up bank operated by Finco Services Inc The plaintiff requested a preliminary and permanent injunctive relief as well as monetary relief from the defendants 87 A settlement conference in this matter is scheduled for March 26 2020 in the United States Courthouse while the parties did not consent to conducting the proceedings before a magistrate judge and requested to be tried to a jury 88 In Europe Libra Association filed an application with the European Union Intellectual Property Office for the registration of the word LIBRA as a verbal trademark The proceeding already received five oppositions to registration from four European companies based mainly on the alleged likelihood of confusion with their prior trademarks 89 The opposing companies are Lyra Network Libra Internet Bank Libri GmbH and Advanced New Technologies Co Ltd In April 2020 the parties will reach the adversarial part of the opposition proceedings unless a settlement is reached during the cooling off period Implementation editBlockchain consensus edit Diem will not rely on cryptocurrency mining 42 Only members of Diem Association will be able to process transactions via the permissioned blockchain Diem hopes to begin transitioning to a permissionless proof of stake system within five years 15 although their own materials admit that no solution exists that can deliver the scale stability and security needed to support billions of people and transactions across the globe through a permissionless network 90 5 Software edit Diem source code is written in Rust and published as open source under the Apache License on GitHub In June 2019 Elaine Ou an opinion writer at Bloomberg News tried compiling and running the publicly released code for Libra At the time the software did little more than allow fake coins to be put in a wallet almost none of the functionality outlined in the white paper was implemented including major architectural features that have yet to be invented Ou was surprised that Facebook would release software in such a state 5 Digital wallet edit In June 2019 Facebook announced plans to release a digital wallet called Calibra in 2020 as a standalone app and also to integrate it within Messenger and WhatsApp 3 In May 2020 Calibra was renamed Novi 91 As of February 2021 Novi and Diem were not released yet and do not have a set release date 1 Move edit Move was the Diem blockchain s proposed smart contract and custom transactions language It was planned to be a statically typed programming language compiled to bytecode The Move language syntax was never released An example Intermediate representation of the language is shown in the Move white paper 92 public main payee address amount u64 let coin 0x0 Currency Coin 0x0 Currency withdraw from sender copy amount 0x0 Currency deposit copy payee move coin See also editBeenz an earlier attempt at an Internet wide digital currency Facebook Credits Flooz an earlier attempt at an Internet wide digital currency List of online payment service providersReferences edit a b Novi novi com Archived from the original on 2021 03 01 Retrieved 2021 02 28 When will Novi be available Novi is currently being built Sign up here to be one of the first to know about Novi Libra Software License Github Archived from the original on 2020 09 17 Retrieved 2019 06 19 a b Facebook s Calibra cryptocurrency wallet launches in 2020 Engadget Archived from the original on 2019 06 18 Retrieved 2019 06 29 a b c Facebook Unveils Libra Cryptocurrency Sets Launch For 2020 NPR org Archived from the original on 2020 05 05 Retrieved 2019 06 19 a b c Ou Elaine 20 June 2019 I Tried Using Facebook s Libra Blockchain It Didn t Work Bloomberg News Archived from the original on 2019 10 29 Retrieved 2019 06 21 Kastrenakes Jacob 2020 12 01 Libra cryptocurrency project changes name to Diem to distance itself from Facebook The Verge Archived from the original on 2020 12 01 Retrieved 2020 12 05 Facebook funded cryptocurrency Diem winds down BBC 2022 02 01 Archived from the original on 2022 02 15 Retrieved 2022 03 14 a b Rodriguez Salvador 20 July 2019 Meet Morgan Beller the 26 year old woman behind Facebook s plan to make its own currency CNBC Tech Archived from the original on 20 July 2019 Retrieved 23 July 2019 Liao Shannon 2018 05 08 Facebook is creating a mysterious blockchain division The Verge Archived from the original on 2019 06 21 Retrieved 2019 06 21 Gartenberg Chaim 2018 05 11 Facebook reportedly plans to launch its own cryptocurrency The Verge Archived from the original on 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Retrieved 19 June 2019 Bain Ben Weinstein Austin 2019 07 16 Facebook Says Libra Won t Launch Until Regulators Satisfied Bloomberg News Archived from the original on 2020 10 18 Retrieved 2019 07 16 Romm Tony 2019 09 19 Facebook s Mark Zuckerberg seeks to reassure wary lawmakers about Libra elections in rare D C trip The Washington Post Archived from the original on 2020 10 22 Retrieved 2019 09 20 Rooney Lauren Feiner Kate 2019 10 04 PayPal withdraws from Facebook s libra cryptocurrency CNBC Archived from the original on 2019 10 04 Retrieved 2019 10 05 a href Template Cite web html title Template Cite web cite web a CS1 maint multiple names authors list link Feiner Lauren 2019 10 11 Facebook s libra cryptocurrency coalition is falling apart as eBay Visa Mastercard and Stripe jump ship CNBC Archived from the original on 2019 10 11 Retrieved 2019 10 11 Brandom Russell 2019 10 11 Facebook s Libra Association crumbling as Visa Mastercard Stripe and others exit The Verge Archived from the original on 2019 10 11 Retrieved 2019 10 11 Light Joe Carville Olivia 14 October 2019 Libra Loses a Quarter of Its Members as Booking Holdings Exits Bloomberg Archived from the original on 2019 10 14 Retrieved 2019 10 14 a b Morse Andrew 2020 12 01 Facebook s controversial cryptocurrency gets a new name Diem CNET Archived from the original on 2020 12 09 Retrieved 2020 12 01 Hoffman Peter Rudegeair and Liz 2022 01 27 Facebook s Cryptocurrency Venture to Wind Down Sell Assets Wall Street Journal ISSN 0099 9660 Retrieved 2022 01 28 Facebook s cryptocurrency failure came after internal conflict and regulatory pushback Washington Post ISSN 0190 8286 Retrieved 2022 01 28 Facebook s Diem on brink of collapse amid sale negotiations POLITICO 2022 01 27 Retrieved 2022 01 28 Facebook Libra the inside story of how the company s cryptocurrency dream died Financial Times 2022 03 10 Archived from the original on 10 March 2022 Retrieved 2022 08 04 Silvergate stock drops 40 after withdrawals spark cost cuts NYSE SI Seeking Alpha 5 January 2023 Church Steven 8 March 2023 Silvergate Slides on Plan to Wind Down Bank Operations and Liquidate Bloomberg News Retrieved 8 March 2023 Caroline Binham Chris Giles David Keohane June 18 2019 Facebook s Libra currency draws instant response from regulators Financial Times Archived from the original on June 19 2019 Retrieved June 19 2019 Duffy Clare 18 June 2019 Facebook wants to make cryptocurrency mainstream Here s how CNN Archived from the original on 20 November 2020 Retrieved 18 June 2019 a b Jeff John Roberts 2019 06 18 Facebook Announces Project Libra Its Wildly Ambitious Plan to Bring Cryptocurrency to the Masses Fortune magazine Archived from the original on 2019 06 19 Retrieved 2019 06 19 The Libra blockchain like other blockchains will provide a tamper proof record of transactions on the network But unlike Bitcoin and other public blockchains only authorized bodies in this case foundation members will be allowed to run a node Facebook 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Facebook verzichtet bei Libra auf chinesische Wahrung Spiegel Online Archived from the original on 2019 10 03 Retrieved 2019 09 30 Shalal Andrea 20 October 2019 Facebook open to currency pegged stablecoins for Libra project Reuters Archived from the original on 2020 03 05 Retrieved 2020 03 04 Rev Transcription Editor Retrieved 2020 03 04 Facebook Weighs Libra Revamp to Address Regulatory Concerns Bloomberg com 3 March 2020 Archived from the original on 2020 03 03 Retrieved 2020 03 04 Wagner Kurt Kharif Olga 2020 04 16 Facebook backed Libra plans multiple single currency coins Fortune Bloomberg News Archived from the original on 2021 05 28 Retrieved 2020 04 17 Murphy Hannah 2021 05 12 Facebook abandons plan to run digital currency from Switzerland Archived from the original on 2021 05 12 Retrieved 2021 05 12 Libra Association A not for profit organization libra org Archived from the original on 2020 05 07 Retrieved 2019 06 19 a b c Cellan Jones Rory June 18 2019 Why Facebook wants to be money s future BBC News Archived from the original on March 7 2020 Retrieved June 19 2019 Shopify joins Libra Association news shopify com Archived from the original on 2020 02 21 Retrieved 2020 02 21 Londra 2020 02 21 Shopify Libra Birligine Katildi Muhabbit in Turkish Archived from the original on 2020 02 21 Retrieved 2020 02 21 Visa Inc V Q3 2019 Earnings Call Corrected Transcript PDF Visa Inc 23 July 2019 Archived PDF from the original on 25 July 2019 Retrieved 3 August 2019 Reichert Corinne 21 January 2020 Vodafone has exited Facebook s Libra cryptocurrency CNET Archived from the original on 2020 01 22 Retrieved 2020 01 21 a b Kaminska Izabella 18 June 2019 Alphaville s Libra cheat sheet Financial Times Archived from the original on 2 May 2020 Retrieved 18 June 2019 Surane Jennifer Verhage Julie Wagner Kurt 18 June 2019 Facebook s Cryptocurrency Project Who s In and Who s Out Bloomberg Archived from the original on 2019 10 20 Retrieved 2019 10 20 Levy Steven Barker Gregory 18 June 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2019 07 13 Japan becomes the latest country to investigate Facebook s Libra Neowin Reuters Archived from the original on 2019 07 15 Retrieved 2019 07 15 Joint statement on global privacy expectations of the Libra network PDF Information Commissioner s Office 5 August 2019 Archived PDF from the original on 5 August 2019 Retrieved 6 August 2019 Murphy Hannah 5 August 2019 Facebook s cryptocurrency raises privacy questions say regulators Financial Times Archived from the original on 6 August 2019 Retrieved 6 August 2019 Grandjean Pablo 2019 08 14 Don t let Facebook take over the financial system Finance Watch Archived from the original on 2019 08 14 Retrieved 2019 08 14 Stiefmuller Christian M 2019 07 22 Libra Heads I win tails you lose PDF Finance Watch Archived PDF from the original on 2019 08 14 Retrieved 2019 08 14 Browne Ryan 2019 09 16 Facebook and JP Morgan meet with global central banks to discuss cryptocurrencies CNBC Archived from the original on 2021 01 31 Retrieved 2019 09 16 Jeff John Roberts 2019 06 18 Facebook s Project Libra 5 Things to Know About the Cryptocurrency Fortune magazine Archived from the original on 2019 06 18 Retrieved 2019 06 19 So in theory only Novi will have a record of your transactions But many Novi users may decide to use its integrated Facebook friend finding feature and if they do their data will be combined Jacob Passy 2019 06 19 Why Facebook s Libra coin could become a big pain in your wallet Market Watch Archived from the original on 2019 06 19 Retrieved 2019 06 19 Libra will be a stablecoin linked to the value of other currencies unlike other cryptocurrencies like bitcoin BTC 4 27 Consumers who use Facebook s Messenger service WhatsApp or a stand alone app will be able to access Libra through a digital wallet managed by new Facebook subsidiary Calibra a b Schulze Elizabeth 2019 08 06 Facebook s Libra plans are under fire again this time from global privacy regulators CNBC Retrieved 2022 07 19 Carrillo Raul 2020 06 25 Banking on Surveillance The Libra Black Paper Americans for Financial Reform Archived from the original on 2020 11 25 Retrieved 2021 08 06 Schrepel Thibault 24 April 2020 Libra A Concentrate of Blockchain Antitrust Michigan Law Review Online SSRN 3574684 Retrieved 1 July 2021 Libra fakes undermine Facebook s cryptocurrency charm offensive Washington Post Archived from the original on 2019 07 23 Retrieved 2019 07 23 Facebook s Libra currency spawns a wave of fakes including on Facebook itself Washington Post ISSN 0190 8286 Retrieved 2022 07 19 Facebook sued over Calibra s look alike logo TheVerge 11 October 2019 Archived from the original on 20 December 2019 Retrieved 4 February 2020 Facebook s Subsidiary Calibra Is Being Sued for Trademark Infringement By Mobile Banking Developer Current 13 October 2019 Archived from the original on 4 February 2020 Retrieved 4 February 2020 Finco Services Inc v Facebook Inc et al 10 October 2019 Archived from the original on 4 February 2020 Retrieved 4 February 2020 LIBRA 018083389 18 June 2019 Archived from the original on 9 June 2016 Retrieved 4 February 2020 Libra White Paper Blockchain Association Reserve Libra org Archived from the original on 2020 05 16 Retrieved 2019 06 18 Porter Jon 2020 05 26 Facebook renames Calibra digital wallet to Novi The Verge Archived from the original on 2021 03 08 Retrieved 2021 02 28 Move A Language With Programmable Resources Libra developers libra org Archived from the original on 2020 04 22 Retrieved 2019 06 19 External links editOfficial website nbsp Retrieved from https en wikipedia org w index php title Diem digital currency amp oldid 1215999858, wikipedia, wiki, book, books, library,

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