Given all the regulatory attention. it might be tempting to put fast-moving cryptocurrency developments into the ‘too hard basket’, or even to declare Libra dead in the water. But the membership of Libra Australia suggests such a response would be shortsighted.
National Law firms Gilbert + Tobin and Piper Alderman, along with the Australian National University and RMIT University, have joined the group, which was created by Heath and Luke Behncke, twin brothers and fund managers at Holon Global Investments.
Having studied the geopolitics of Libra over the past two months, the Behncke brothers reckon more trusted leadership than Facebook will emerge to keep the plan alive.
“The digital currency genie is out of the bottle,” Luke Behncke says. “Facebook doesn’t want to be the leader, it is clear they will step back. This means that other members will step up, or it could still be led by new members yet to join.”
While it seems unlikely that foundation partners Mastercard and Visa would take a leading role, given the potential for Libra to disrupt traditional card payments, would the likes of Amazon and Google consider getting on board?
It is still very early days for Libra, and Facebook’s initial plan to have it up and running in the first half of next year looks wildly ambitious, given the number of unresolved and challenging questions.
It is still unclear how the blockchain technology manages privacy and security, or how things will progress to a more decentralised system, and then how regulation is triggered in local jurisdictions.
While Reserve Bank of Australia governor Philip Lowe and other central bankers have said the efficiency of the existing electronic payments system will be enough to repel the threat of Libra, the Behnckes say a cryptocurrency that is natively digital and open source will ultimately lead to a smoother cross-border payments experience.
This was the key reason US venture capital firm Union Square Ventures joined Libra as a foundation partner.
Fred Wilson, a partner at the company, says crypto assets have the potential to move from being curiosities for enthusiasts to being default internet and financial infrastructure once a new generation of web browsers, smartphones and apps emerge with crypto-compatibility built in.
At the Jackson Hole gathering of central bankers in the United States over the weekend, outgoing Bank of England governor Mark Carney maintained the official scepticism towards private sector players like Facebook running a payments system, but said Libra may provide the catalyst for central banks to develop their own digital currencies.
“The concept is intriguing,” he said, suggesting central bank digital currencies, backed by a basket of currencies (like Libra is proposing), could help break the hold of the US dollar on the global monetary system.
“It is an open question whether such a new ‘synthetic hegemonic currency’ would be best provided by the public sector, perhaps through a network of central bank digital currencies,” Carney said.
Through Libra Australia, the Behnckes want to deal Australia a seat at the table as cryptocurrency plans develop.
The brothers are planning on attending the OECD Global Blockchain Policy Forum 2019 in mid-September and want to seek permission from the Libra Association to run an Australian “node” for the system.
While the association’s initial rules set a very high bar for admission to the group, the Behnckes hope if they can show they can make a “meaningful contribution to the ecosystem” their local chapter could be admitted.
“This is the start of a long conversation, and we feel Australia needs to be part of it,” Luke Behncke says.
“If we are not present, there are too many risks. No government, regulator or bank has all the answers. We need to ensure we bring as many bright minds to look at the impacts, the challenges, and the opportunities for business. But we need to engage now, because the window of opportunity is small.”