Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Closing the circle:in Libra we trust?

52 views

Published on

Gikii 2019 London

Published in: Law
  • Be the first to comment

  • Be the first to like this

Closing the circle:in Libra we trust?

  1. 1. CLOSING THE CIRCLE: IN LIBRA WE TRUST Alexandra Giannopoulou Valeria Ferrari Blockchain and Society Policy Research Lab Institute for Information Law (IViR) University of Amsterdam Gikii 9 September 2019 University of London
  2. 2. Libra will be a digital currency, qualified as a stablecoin. Facebook Inc created Libra, but it only positions itself as co-founder of the Libra Association and as a participating node and user of the project also via its subsidiary, the custodial wallet Calibra. 28 companies are founding members of the Libra Association. Their role consists in maintaining a validating node and having a representative member on the Council of the association.
  3. 3. Intermediaries role: 1. A user provides his identity (national or social) and funds. 2. Funds are deposited in the Libra Reserve and indirectly command the issuance of libras 3. Validator nodes measure the outstanding libras and are queried by intermediaries
  4. 4. Imagine an open, interoperable ecosystem of financial services that developers and organizations will build to help people and businesses hold and transfer Libra for everyday use. To ensure that Libra is truly open and always operates in the best interest of its users, our ambition is for the Libra network to become permissionless (…) The Libra Blockchain will be open to everyone: any consumer, developer, or business can use the Libra network, build products on top of it, and add value through their services.
  5. 5. The Libra blockchain: towards open, decentralized, permissionless? ■ Is the promised decentralized and open architectural environment possible within the Libra circle? ■ If yes, is it the future we want?
  6. 6. The Libra blockchain: towards open, decentralized, permissionless? ■ Is the promised decentralized and open architectural environment possible within the Libra circle? ■ If yes, is it the future we want?
  7. 7. The Libra blockchain: towards open, decentralized, permissionless? ■ Is the promised decentralized and open architectural environment possible within the Libra circle? ■ If yes, is it the future we want?
  8. 8. «the Libra Blockchain will be open to everyone: any consumer, developer, or business can use the Libra network, build products on top of it, and add value through their services. Open access ensures low barriers to entry and innovation and encourages healthy competition that benefits consumers. This is foundational to the goal of building more inclusive financial options for the world» A financial ecosystem open to everyone
  9. 9. «the Libra Blockchain will be open to everyone: any consumer, developer, or business can use the Libra network, build products on top of it, and add value through their services. Open access ensures low barriers to entry and innovation and encourages healthy competition that benefits consumers. This is foundational to the goal of building more inclusive financial options for the world» A financial ecosystem open to everyone This sounds cool!
  10. 10. A financial ecosystem…open to everyone
  11. 11. A financial ecosystem…open to everyone This sounds…cool
  12. 12. A financial ecosystem…open to everyone This sounds…cool …or maybe not
  13. 13. A financial ecosystem…open to everyone This sounds…cool …or maybe not And also… Can it be true?
  14. 14. Anti-trust vs financial law regulation The openness of the Libra blockchain ecosystem would be necessary to foster competition in the market of crypto-assets and contrast Libra’s potential dominance in the domain of online payments
  15. 15. Anti-trust vs financial law regulation The openness of the Libra blockchain ecosystem would be necessary to foster competition in the market of crypto-assets and contrast Libra’s potential dominance in the domain of online payments However unless specific barriers are put into place, such openness would entail the entrance of unregulated entities: non-custodial wallet providers, peer-to-peer exchanges
  16. 16. Anti-trust vs financial law regulation The openness of the Libra blockchain ecosystem would be necessary to foster competition in the market of crypto-assets and contrast Libra’s potential dominance in the domain of online payments However unless specific barriers are put into place, such openness would entail the entrance of unregulated entities: non-custodial wallet providers, peer-to-peer exchanges Can they, really?
  17. 17. non-custodial wallet providers & p2p exchanges  are not covered by financial law requirements (e.g. MiFID’s recordkeeping, disclosure, reporting, transparency requirements; 5th Anti-Money Laundering Directive; BSA obligations under FinCEN)
  18. 18. non-custodial wallet providers & p2p exchanges  are not covered by financial law requirements (e.g. MiFID’s recordkeeping, disclosure, reporting, transparency requirements; 5th Anti-Money Laundering Directive; BSA obligations under FinCEN)  Even if they are (e.g. Switzerland), the enforcement of existing requirements is impracticable (e.g. who is the responsible operator?)/ they are technically unable to comply!
  19. 19. non-custodial wallet providers & p2p exchanges  are not covered by financial law requirements (e.g. MiFID’s recordkeeping, disclosure, reporting, transparency requirements; 5th Anti-Money Laundering Directive; BSA obligations under FinCEN)  Even if they are (e.g. Switzerland), the enforcement of existing requirements is impracticable (e.g. who is the responsible operator?)/ they are technically unable to comply!  supervised service providers would not be able to prevent uncompliant payments from being executed, with potential consequent liability for them
  20. 20. non-custodial wallet providers & p2p exchanges  are not covered by financial law requirements (e.g. MiFID’s recordkeeping, disclosure, reporting, transparency requirements; 5th Anti-Money Laundering Directive; BSA obligations under FinCEN)  Even if they are (e.g. Switzerland), the enforcement of existing requirements is impracticable (e.g. who is the responsible operator?)/ they are technically unable to comply!  supervised service providers would not be able to prevent uncompliant payments from being executed, with potential consequent liability for them  their presence in the ecosystem jeopardizes efforts in monitoring and tracking transactions in crypto-assets
  21. 21. Openness and decentralisation do not fit the governance of the financial sector ■ The regulation of the financial sector relies on the existence of centralized intermediaries (firms or institutions) that are ascribed direct enforcement duties
  22. 22. Openness and decentralisation do not fit the governance of the financial sector ■ The regulation of the financial sector relies on the existence of centralized intermediaries (firms or institutions) that are ascribed direct enforcement duties ■ decentralization and lack of centralized controlling actors prevent both the formal applicability and practical enforceability of norms
  23. 23. Openness and decentralisation do not fit the governance of the financial sector ■ The regulation of the financial sector relies on the existence of centralized intermediaries (firms or institutions) that are ascribed direct enforcement duties ■ decentralization and lack of centralized controlling actors prevent both the formal applicability and practical enforceability of norms ■ the governance of the financial sector does not accommodate systems where transactions are cleared by persons that have no obligations to do so or accountability for failure
  24. 24. Which enforcement duties would the Libra Association have in relation to third-party applications built on top of their system?  How are enforcement duties shared among the Libra Association and financial authorities/law enforcement agencies?
  25. 25. Which enforcement duties would the Libra Association have in relation to third-party applications built on top of their system?  How are enforcement duties shared among the Libra Association and financial authorities/law enforcement agencies?  Is the Association liable for non-compliant third-party services and activities operating in the Libra ecosystem?
  26. 26. Which enforcement duties would the Libra Association have in relation to third-party applications built on top of their system?  How are enforcement duties shared among the Libra Association and financial authorities/law enforcement agencies?  Is the Association liable for non-compliant third-party services and activities operating in the Libra ecosystem?  If so, how would such liability impact the level of openness of and competition within the ecosystem (e.g. would there be a duty to impose barriers to enter the market, to prevent unregulated activities to populate the ecosystem)?
  27. 27. Can businesses compete in Facebook’s “open” environment? ■ barriers for unregulated/decentralised business models are likely to be imposed
  28. 28. Can businesses compete in Facebook’s “open” environment? ■ Libra will be the standard setter: minor service providers could be unable to withstand the requirements set for it
  29. 29. Towards a new digital identity standard ? “[a]n additional goal of the association is to develop and promote an open identity standard” because “decentralized and portable digital identity is a prerequisite to financial inclusion and competition”.
  30. 30. Towards a new digital identity standard ? “[a]n additional goal of the association is to develop and promote an open identity standard” because “decentralized and portable digital identity is a prerequisite to financial inclusion and competition”. Does this sound familiar?
  31. 31. Decentralized identity  The establishment of a standardized, decentralized, and open identity is among the oldest unsolved issues on the Internet.  Technical standardization efforts were the main gateway of private companies or organizations to create a unified identifier for individuals online.  The concept of Self-sovereign identity is reemerging in the context of decentralized technologies in order to describe a technological tool that enables individuals to own and control their identity data without the need for intervening administrative authorities who will store and create the trust between transaction parties.
  32. 32. Decentralized identity  The establishment of a standardized, decentralized, and open identity is among the oldest unsolved issues on the Internet.  Technical standardization efforts were the main gateway of private companies or organizations to create a unified identifier for individuals online.  The concept of Self-sovereign identity is reemerging in the context of decentralized technologies in order to describe a technological tool that enables individuals to own and control their identity data without the need for intervening administrative authorities who will store and create the trust between transaction parties.
  33. 33. Decentralized identity  The establishment of a standardized, decentralized, and open identity is among the oldest unsolved issues on the Internet.  Technical standardization efforts from many companies or organizations in order to create a unified and persistent identifier for individuals online (see OpenID and OAuth).  The concept of Self-sovereign identity is reemerging in the context of decentralized technologies in order to describe a technological tool that enables individuals to own and control their identity data without the need for intervening administrative authorities who will store and create the trust between transaction parties.
  34. 34. This looks promising, right? Right? “ to bank the unbanked” “Lack of documentation and distrust in the financial system were both cited by roughly a fifth of adults without a financial institution account”
  35. 35. Right?
  36. 36. This looks promising, right? Right? “ to bank the unbanked” “Lack of documentation and distrust in the financial system were both cited by roughly a fifth of adults without a financial institution account”
  37. 37. This looks promising, right? Right? “ to bank the unbanked” “Lack of documentation and distrust in the financial system were both cited by roughly a fifth of adults without a financial institution account”  To increase economic empowerment around the world  to increase financial inclusion through the creation of a perpetual unique digital identity.
  38. 38. But do we want this? A privately issued –more specifically, Facebook issued- identity becoming the dominant identifier for both online and offline transactions is hard to imagine as anything other than a dystopia. Besides the privacy-related existing (and future) mishaps of Facebook, the identity standard is promised to become progressively decentralized, permissionless and open. Is an open permissionless ecosystem ideal for the management of identification credentials and of the transactions based on these credentials? it would still remain a Facebook monopoly, which would get intertwined in the system and social interactions forever.
  39. 39. THANK YOU! a.giannopoulou@uva.nl v.ferrari@uva.nl You can find our presentation online at www.slideshare.net/alex_giannopoulou @alex_giann @ferrari_bv

×