Facebook and its Libra partners were forced to restructure the basics of proposed digital currency due to regulatory backlash, however, lawmakers are still critical.
Hours after the public issuance of the second whitepaper by the Libra Association, Rep. Sylvia Garcia, a member of the House Financial Services Committee, pointed out that the consortium did not “address the concerns” she raised in the past.
Instead of launching a digital currency backed by a basket of fiat and other assets, the Swiss-based non-profit is now proposing multiple fiat-backed stablecoins.
The concept of a single digital currency LBR still exists, however, instead of directly tying it with a basket of fiat, now it will be supported by other proposed stablecoins.
Per the updated whitepaper, the step was taken to tone down the direct threats on the existing monetary systems.
“Now Facebook and the Libra Association have issued a second white paper that retains a Libra coin backed by a basket of assets. As such, this does not address the concerns I raised when Mr. Zuckerberg testified before the Financial Services Committee, and for which I introduced legislation to address said concerns,” Rep. Garcia said.
“Facebook and the Libra Association had an opportunity to address the concerns I and my other colleagues raised with their initial whitepaper. Unfortunately, they chose not to listen to the bipartisan concerns raised about Libra.”
She also clarified that the body of lawmakers will continue to push for the regulation of Libra or any such stablecoins under the existing securities law of the United States.
Major partners dropped out
Libra was first hailed by the tech communities and 27 companies other than Facebook joined the Libra Association initially. However, with growing regulatory tensions, 8 original members including Visa, Mastercard, Paypal, Stripe, eBay, and Vodafone dropped out of the project.