Facebook imagines a future in which consumers will pay for online and offline services with its cryptocurrency – Libra. Our view is that Libra will eventually enjoy broad adoption. The cryptocurrency floodgates are open, it’s primarily a question as to how Libra and others will be regulated. Regulation boils down to the size of the toll to be extracted by government and the ability for government to track transaction activity. Below is our overview of Libra and the Facebook subsidiary spearheading the initiative – Calibra.

Calibra: Calibra is a newly formed Facebook subsidiary that plans to provide financial services that will allow people to access the Libra Network.

• The first product Calibra will offer is a digital wallet for Libra, a new global currency powered by blockchain technology.
• The digital wallet will be available in Messenger, WhatsApp and as a standalone app (sometime in 2020).

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Libra: Libra’s initial focus will be on transferring money. Libra will be regulated globally. Here is the official Libra white paper.

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• The SEC is determining whether Libra may be regulated as an ETF.
• David Marcus, head of Facebook’s Calibra, expects Libra to be regulated by Switzerland’s financial regulator given that the Libra Association is headquartered in Switzerland.

Libra Association: The Libra Association is a non-profit formed by Facebook and partner organizations to oversee Libra and its development.

• The partnership includes other nonprofit organizations, cryptocurrency firms, VC firms as well as Fintech, Telecom and Technology providers including Booking Holdings, Coinbase, Mastercard, Visa, eBay, PayPal, Stripe, Spotify, Uber, Lyft, and Vodafone.
• The Libra Association does not yet have a charter, therefore it is difficult to regulate it at this juncture.

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Libra Reserve: Facebook and the partner organizations will contribute to Libra Reserve, an underlying asset base that will ensure every unit of Libra currency is supported by an asset with intrinsic value.

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