Major cryptocurrency exchange, Binance’s co-founder He Yi has said that the exchange has learnt from Libra’s mistake and will be doing things differently for the launch of Venus, its own ‘independent regional version’ of Libra. The strategy Binance is adopting is to make Venus, government and regulatory compliant. While this sounds simple, given the challenges Facebook’s Libra has faced, it might be easier said than done.
Binance’s Venus Might Face Regulatory Problems
Last week, Binance unveiled plans to develop stablecoins, which, unlike Bitcoin and other cryptocurrencies, will be backed by various fiat currencies. Yi admits that the idea behind Venus was inspired by Facebook’s Libra and it has learnt from the various regulatory issues Libra has faced from its announcement date.
Speaking to Bloomberg, Yi said the exchange would ensure that it complies with regulations in any country it plans to launch in. “If we want to launch Venus in a country, we’ll make sure it complies with regulations,” she said.
Facebook’s proposed cryptocurrency, Libra has faced huge resistance from governments around the world and come under increased scrutiny from various regulatory bodies. President of the United States, Donald Trump made scathing comments about cryptocurrency after Facebook’s announcement of Libra. According to the President who reiterated his stance that bitcoin and cryptocurrencies are not money and are also too volatile, “Facebook’s Libra’s virtual currency will have little standing or dependability.”
Libra’s announcement may have also spurred China’s Central Bank PBoC to hasten the launch of their own fiat-backed digital currency.
Crypto researcher and founder of TokenInsight Hu Tao, however, thinks that Venus will face the same problems Libra is facing because governments are still wary and skeptical “In theory, Binance will face the same challenges as Facebook. So far, regulators around the world can’t gauge precisely the potential risks stable coins will bring to the financial systems, and that is why they are very careful about Libra-like currencies,” Tao said.
A Conservative Approach
Binance’s major strategy to avoiding the troubles currently faced by Libra is to ensure that their project, Venus, is compliant with the regulations in various countries. The co-founder says that Binance will adopt a “more conservative” approach in gaining acceptance for the Venus project from governments and regulatory bodies. The project, Yi said, will focus more on meeting regulatory standards than ‘technological developments’
Binance’s stance on regulatory compliance for the Venus project is indicative of the exchange’s willingness to grow government relations, compared to how it has operated in the past. The exchange which operates out of Malta has in the past avoided countries with strict regulations; it even left China to set up base in Malta.
Binance will not be using its already existing blockchain, Binance Chain, for Venus as it plans on having an open-sourced blockchain for the currency. This, they hope, will attract more partners for the Venus project. While there is no definite launch date for the currency, Yi said that more updates and partnerships will be released in the coming days.