July Libra Version Finale - Taurus Group...Libra: Taurus’ view on Facebook’s cryptocurrency project - July 2019 6 David Marcus, the former President of Paypal, Facebook has the

July 2019 Market analysis

Taurus Group SA

Libra Taurus’ view on Facebook's cryptocurrency project

Taurus Group SA Market analysis

Libra: Taurus’ view on Facebook’s cryptocurrency project - July 2019 1

I. KEY TAKEAWAYS 2

II. FOREWORD 3

III. LIBRA: ORIGINS AND ORGANIZATION 4

A) The case for underbanked 4

B) Facebook’s growth: new S-curve expected 5

C) Organization: the Libra Association 6

D) Business model and expected impact on Facebook 8

IV. LIBRA: TECHNOLOGY OVERVIEW 9

A) Comparison with blockchain protocols 10

B) Comparison with traditional payment rails 11

C) Technical details 12

IV. LIBRA: POLITICAL AND REGULATORY FEEDBACK 15

V. WHAT’S NEXT? 16

A) Roadmap 16

B) The mother of all battles: political 17



I. KEY TAKEAWAYS

■ Facebook: 99% of revenues driven by advertising.

75% of revenues coming from the western-world. 75% of world population in emerging markets.

■ Libra Association: The Libra blockchain governance

is handled by the Libra Association which will be composed of 100 members. As of today 28 are known as “Founding Members”.

■ Libra technology: A public but permissioned

blockchain maintained by the LibraBFT consensus method. Regarding the blockchain trilemma, Libra has, for now, given up some decentralization aspects to enable more scalability.

■ Regulation: Core questions remain to be answered.

What regulation will Libra and/or Facebook be subject to? What will be the answers from politicians, regulators and central bankers? This will be to us the mother of all battles.

Facebook revenue distribution, 2010-2019



II. FOREWORD

Our mission is to give people the power to build community and bring the world closer together. Facebook

Mark Zuckerberg started 2018 with a very clear intention in a post stating “A lot of us got into

technology because we believe it can be a decentralizing force that puts more power in people's

hands. (The first four words of Facebook's mission have always been "give people the power".) [...]

There are important counter-trends to this –like encryption and cryptocurrency – that take power

from centralized systems and put it back into people's hands. But they come with the risk of being

harder to control. I'm interested to go deeper and study the positive and negative aspects of these

technologies, and how best to use them in our services”1

We believe Facebook started ramping-up their teams on their blockchain project soon after the

above post. On June 18, 2019, Facebook’s David Marcus eventually, who stepped down from

Coinbase board in August 2018, unveiled the whitepaper of its long-awaited Libra coin with a

mission to “empower billions of people”.

With Facebook’s backing, Libra has the opportunity to disrupt the [cross-border] payment industry

thanks to distributed ledger technology and the social media’s 2.7bn user-base. It is also perceived

as a potential threat to the hegemony of the US dollar (see US congressmen2 letter published on

July 2 2019).

Is “banking the unbanked” the true objective of Libra or is it just a new growth initiative to diversify

from Facebook’s 99% advertising revenue stream? What could be the reaction of regulators and

banks? This article tries to i) understand Facebook’s situation ii) describe the Libra project iii) rapidly

review the technology iv) highlight some regulatory reactions it has created iv) and provide a

perspective on the quarters to come.

Feel free to send us comments at [email protected].

1 https://www.facebook.com/zuck/posts/10104380170714571 - January 4 2018 2 https://financialservices.house.gov/uploadedfiles/07.02.2019_-_fb_ltr.pdf



III. LIBRA: ORIGINS AND ORGANIZATION

A) The case for underbanked

Libra’s whitepaper begins with a statement: more and more people have access to smartphones,

internet connectivity which are used to exchange all across the globe at a cheap cost but, on the

other hand, there are still more than 1.5 billion3 people who remain unbanked.

Figure 1: Adults without a bank account (2017) 3

The paper compares the financial system to the telecommunications networks before the internet:

people still pay high fees and high interest rates to financial services firms if they have access to a

bank at all. Libra’s stated purpose if thus to try to solve this issue via blockchain and stable coins,

using internet access of the unbanked population. In a nutshell, Libra could help those who cannot

afford banking services and/or usually live in countries with weak and volatile currencies to move

money for free via Facebook or WhatsApp. This could make sense. We at Taurus have had interesting

discussions with some politicians on the usefulness of stable coins in refugee areas where i) people

do not have access to bank accounts ii) have mobile phones iii) need to receive cash - for example

from refugee organisations - and pay for their daily spending.

3 The World Bank, The Global Findex Database 2017, https://globalfindex.worldbank.org/



B) Facebook’s growth: new S-curve expected

The following 3 remarks can be made about Facebook’s - so far tremendous - revenue generation

ability.

● Facebook is an advertising platform: 99% of revenues come from advertising

○ 75% of those revenues come from users based in the US & Canada (50%) and Europe

(25%);

○ 16% come From Asia-Pacific;

○ 10% from the rest of the world.

● Low emerging markets penetration: Facebook’s population penetration rate is the lowest in

Africa (12.9%) and Asia (17.7%)4 while these two continents represent 5.7 bn people, 76% of

the world total. This share is expected to grow amid an aging western-world population.

● No payment or e-commerce: Payments, which used to account for ca. 15% of Facebook’s

total revenues, have shrunk to almost zero. The payments industry could be a major “cash

cow” as global digital commerce volume accounted for $3 trillion in 2017 and will double by

2022, with APAC expected to gain a 70% share by that time.5

Figure 2: FB advertising revenue by user geography

Figure 3: FB revenue breakdown (Q1 2010 - Q1 2019)6

Based on the above facts, we can see two areas of growth: 1) geographic diversification 2) business

diversification.

In relation to the first point, it appears clear that most of the growth potential needs to come from

emerging markets. Providing basic utility features i.e., access to financial services, to a large,

underbanked population that has already access to smartphones could be a relevant strategy. With

4 https://www.internetworldstats.com/facebook.htm 5 Global payments 2018: A dynamic industry continues to break new ground, McKinsey&Company, Global banking, October 2018, p.6 6 Facebook financial statements



David Marcus, the former President of Paypal, Facebook has the expertise in-house to build large

payment networks. That being said, regulation, education efforts as well as competition from local

platforms (Alipay and co in China, M-Pesa and similar in Africa) should not be neglected.

In relation to the last point, it seems natural for Facebook to develop e-commerce capabilities in

particular inApp purchases and compete with Amazon and other types of e-commerce platforms. It

already started doing so on Instagram. Having a trusted stable coin could make the buying process

simple and instantaneous. It remains to be seen advantages vs. existing payment options (see section

D below) and adoption by small and medium corporations.

C) Organization: the Libra Association

1. Overview

The Libra Association (“Libra”) currently consists of 28

founding members and targets 100 by the go-live of the

project. Libra is composed of companies from different

sectors: payments, technology & marketplace,

telecommunications blockchain and non-profits7.

Libra is a Geneva-based non-profit organization which was

created to supervise the Libra Blockchain development and

managing the Reserves.

It will be governed, for an unknown period of time, by the

Founding Members which will be responsible for maintaining

the network and run the corresponding nodes. In return, they will have voting rights.

2. Who can join?

The below table shows the conditions set by Libra to join the association.

Type of company Acceptance criteria

Blockchain companies ● No more than one third of the whole members ● Have been in operation for more than 12 months ● Have enterprise level operations pertaining to security, privacy

and infrastructure ● Custodies $100 mn or more of assets for clients ● Exceptions possible if approved by the council and if it could

make a meaningful contribution to the network

7 See full list at https://libra.org/en-US/association/#founding_members



Crypto-focused investors ● > $1 bn of AuM

Social impact partner ● Willingness to serve the unbanked and underbanked ● Have been working on poverty alleviation for > 5 years ● Willingness to use innovative methods such as blockchain ● Be global or address specific underbanked geographical areas ● Trusted organization and track record of social impact ● Annual operating budget > $ 50 mn.

Academic institutions ● Ranked Top-100 by QS World University Ranking ● Computer department ranked Top-100 for its computer science

department by CSRankings

Businesses ● Market value > $ 1bn or > $ 500 mn. in customer balances ● Global scale with > 20 mn people reach per year ● Brand sustainability: Recognized Top100 industry leader

3. Governance

Founding members signed non-binding agreements where each partner has vowed to contribute at

least $10 million (except NGOs and some blockchain companies) although no cash was disbursed so

far. The list of members will be extended to reach 100 members.

Ultimately, the 100 partners are said to be governing the future of the Libra project, interact with

policy makers, and Facebook, through its subsidiary Calibra, will account for 1/100 of the votes, hence

pre-empting potential criticism on their hegemony. The detailed governance remains to be seen and

we expect several changes in the months to go.



D) Business model and expected impact on Facebook

We see revenue potential in:

1. Transaction fees: network usage

2. Commission fees: e-commerce

3. Intangible: increased brand recognition (despite being used by 2.7bn users)

David Marcus, who leads Facebook’s Libra efforts, said the company didn’t plan to take a fee when

people send money to friends, and will charge instead “tiny transaction fees” for payments to

businesses. We see more potential for cross-border transfers and less for intra-jurisdictions transfers

to be disrupted by Libra as 96%8 of developed economies and 63% of developing economies already

have real-time local payment transfers.

We believe that significant upside could come from second-layer services that could be built within

Facebook’s existing ecosystem (Facebook, WhatsApp or Instagram) such as inApp purchases where

Facebook and its affiliate companies will make a commission out of sales. This is a strategic priority

for Facebook which has started doing so on Instagram.

The blockchain world has been missing an institutionally-backed stable coin (waiting for government

backed ones). Assuming success, the intangible value in terms of brand awareness and further brand

penetration could be tremendous for Facebook. That being said, Central banks could also issue their

own digital currencies and compete with the Libra project to some extent. Christine Lagargde, the

future ECB president, already considered the possibility of issuing central banks digital currencies,

stating that “there may be a role for the state to supply money to the digital economy”.9 Below are

the countries that have explored or are currently exploring central bank-issued digital currencies10:

- Australia

- Brazil

- China

- Denmark

- Norway

- Sweden

- Uruguay

- Bahamas - Canada - Curuçao and Sint Maarten - Ecuador - Israel - Philippines - United Kingdom - Switzerland

8 On a population weighted basis 9 Winds of Change: The case for new digital currency, Ch. Lagarde, IMF Managing Director, Singapore Fintech Festival, Nov 2018, available at https://www.imf.org/en/News/Articles/2018/11/13/sp111418-winds-of-change-the-case-for-new-digital-currency 10 As listed in Casting Light on Central Bank Digital Currency, IMF Staff Discussion Note, November 2018 + Taurus research team



IV. LIBRA: TECHNOLOGY OVERVIEW

Libra doesn’t bring revolutionary features, but instead regroups lessons learned from other protocols

to try to build a state-of-the-art blockchain (some may argue it is not a blockchain, but we will use this

word or distributed ledger for simplicity). Here are our views on what they did.

1. Consensus algorithm: Libra foregoes PoW and PoS11 consensus protocols, and instead uses

a protocol from the pBFT12 family, namely a variant of HotStuff. This leverages partial

signatures to achieve linearity (associated with PoW) and responsiveness (associated with

pBFT). That means the time between blocks can be arbitrarily short.

2. Initially permissioned: Beginning as a permissioned system allows for bugs to be ironed out

in a controlled environment, and a progressive addition of advanced features later on. For

instance, more randomization for leader selection, to secure against denial-of-service attacks

against leaders.

3. Contracts: Libra uses their own contract language widely, by making every transaction

essentially execute a smart-contract script, and even some core parts of the engine. By

programming as many components as possible as contracts, they leave the door open to add

transactions that can modify core parts of the system. For instance, leader selection is planned

to be written in the newly created Move language, which will add modularity to that part.

4. Move language: Libra follows Ethereum’s footsteps by providing a smart-contract language,

which although initially foreign to developers, is easier to apprehend than an already existing

language not adapted to blockchain development (it is easier to learn a new language

adapted to the job, rather than forget important bits of the one you used).

5. Functional programming: The Move language enforces functional programming paradigms,

making contract programming less intuitive, but less bug-prone.

11 PoW = Proof of Work, PoS = Proof of Stake 12 pBFT = practical Byzantine Fault Tolerance



A) Comparison with blockchain protocols

The table below draws a rapid comparison between Libra with the 3 major protocols (BTC, ETH, XRP)

and JPM coin.

BTC ETH XRP JPM COIN LIBRA

Blockchain Bitcoin Ethereum XRP ledger Quorum

(Ethereum fork) Libra blockchain

Type Public Public Public Private Public

Validators Permissionless Permissionless Permissionless Permissioned Permissioned→

Permissionless

Consensus

maintaining

mechanism

POW POW (POS in

2020)

Ripple Protocol

Consensus

Algorithm

(RPCA)

Raft CFT &

Istanbul pBFT LibraBFT

Number of

nodes 10’300 8’060 1’047 N/A 100

% of blocks

created by top

3 creators

47% 62,50% Unknown N/A 3%

TPS13 7 15 10 -1’50014 Variable 1’00015

Transaction fee

(range) $0.15 - $6.50 $0.05 - $1.25

$0.0002 -

$0.0047 free

Free for retail

TBD B2B

Time to settle16 1 hour 10 minutes 4 seconds Few seconds TBD

Sources: bitnodes.earn, btc.com, ethernodes.org, etherscan.io, xrpcharts.ripple, ripple.com/xrp/market-performance,

bitinfocharts.com

13 Transactions Per Second 14 In theory it can go until 1’500 TPS but in reality it is rather around 13 TPS 15 Facebook’s estimation 16 Estimated time for a transaction to be final



B) Comparison with traditional payment rails

The table below shows that competition is fierce both in the western world (Visa, Mastercard,

Paypal) and the emerging one (Alipay but also Wechatpay and others in Asia).

Visa / Mastercard Paypal Western-union Alipay LIBRA

Regulatory

status Payment service

provider Money transmitter Money transmitter

Payment service

provider To be defined

Global

presence 160 currencies 100 currencies 200 countries 18 currencies Global

Number of

users

V: 3.3 bn cards in use

MC: 0.87 bn cards in

use

277M17 150M18 608M19 Unknown

Transactions

per day 150M

27M20

2.76M21 175M N/A

TPS 1.7K on average.

Max capacity 65K 312 on average 32 on average

2K on average

Record established

in 2017: 256K

1’000

Cost for

“Personal

Transactions”

Annual fee: $20 avg

Domestic: Free

Cross-border: 1.5% on

average

Domestic: free

Cross-border: min

$2.49

Online: Min $4.50

In person: Min $20

Free under $299.

0.1% above $299.

Free for retail

TBD B2B

Cost for

“Commercial

Transactions”

2.30% + Fixed fee

3.40% +

Fixed/Cross border

fee

Unknown 0.55% “Tiny transaction for

merchants”

Time to settle 0 - 2 days 0 - 2 days Minutes T+1 probably few

seconds

Equipment

required

Integration of a

payment processing

solution

Bank account ID Bank account Libra wallet

Source: visa, paypal.com, blockchain.com, expandedramblings.com

17 Q1 2019 active accounts worldwide 18 2016 figures 19 Number of monthly active users as of Q1 2019 20 9.9 billion payments performed in 2018 21 2017 figures



C) Technical details

1. Public permissioned blockchain

Libra is pseudonymous and public in the sense that everyone can access the network using a pair of

public-private keys.

The code is open source, anyone can deploy smart contracts (although pre-checks will be performed

to mitigate bug occurrence) and read the database by pulling requests to the Libra nodes. However,

unlike Bitcoin or Ethereum, it will be permissioned at the beginning, ie the validators will be selected

on a discretionary basis. Over time (a 5-year deadline has been announced), the system will be

transitioned from a permissioned to a permissionless mode meaning that the members anybody will

be able to maintain the network following a Proof-of-Stake (POS) approach.

This decision makes sense: In its early stages, a permissioned blockchain is preferable to a

permissionless one as bugs are ironed out and funds distributed. In addition, having 100 validators

is a relatively high number and limits critics in relation to centralization of power. In other words, we

believe Facebook is waiting for technology to improve and the industry to form before transitioning

to permissionless types of blockchains.

2. The Ledger State and Ledger History

Bitcoin or Ethereum blockchains are working on a Block basis whereas Libra uses “States” which make

some purist say it is not a “block” chain. The Libra database is composed of three variables: Ti, Oi,

Si representing respectively the transaction, the output and the ledger state. Each time a new set of

transactions is recorded (i.e. Ti), the ledger moves from the previous State (Si-1) to the new State (Si).

By accessing the latest version of the Ledger State, users have the most updated view on the holdings

held by the different addresses across the entire network.

The Ledger History keeps trace of every past network state. It retains all the previous addresses’

balances but also all the transactions that occurred, enabling anyone who have access to this History

(validators for example) to re-execute them to verify the authenticity of the current state.



3. The LibraBFT Consensus

A consensus method is a way to reach an agreement on a system state in a distributed system. The

Libra blockchain uses the LibraBFT (Byzantine Fault Tolerance) consensus which is a variant of

HotStuff. Byzantine Fault Tolerance means that the consensus will still work in the case of faulty

participants. In addition, LibraBFT also implements a pacemaker mechanism to help liveness, and

plans to add misbehaviour detection.

What is Hotstuff?

HotStuff is similar to more traditional BFT algorithms (like pBFT), but uses threshold signatures to

limit the number of signatures sent over the network, and the addition of a third round, that limits

the broadcasting of messages. Compared to pBFT, the number of signatures sent over the network

drops from O(n³) to O(n). HotStuff is the first known consensus algorithm to manage this linearity

and keep responsiveness (i.e. consensus is limited by network delay, not other factors like in

PoW/PoS).

In a nutshell the initial Libra consensus method is astute in a sense that it offers higher transaction per

seconds and no incentive issues like in PoW that creates “winner takes all” and “richest get richer”

side-effects. Once Libra will be transitioned on a fully PoS consensus method approach, potential

collusion behaviors have to be closely monitored.

4. Move language & Transaction execution

Facebook engineers developed a new programming language called “Move”. The language has

been specifically designed to follow transactions’ logic and smart contracts implementation on the

Libra blockchain. Move developers have paid particular attention to security trying to minimise on-

chain bugs occurrence. For instance, they took preventive measures to prevent assets from being

cloned. The latter is one of the hard-coded attributes of the so-called “resource types” that are the

programmable assets within the Move language. All the safety checks are primarily performed by the

Move Virtual Machine (VM).

Like Ethereum where users pay GAS to execute smart contract or send a transaction, Libra protocol

will charge transaction fees denominated in Libra coins in order to manage demand for computing

capacity. Fees will be low in normal conditions but could rise significantly in case of high demand.

Moreover, having such mechanism provides a protection against DDOS (Distributed Denial-Of-

Service) attacks because hackers would have to spend billions to overload the system.



Keeping in mind the stated objective to support the underbanked, we are waiting for further details

on the fee mechanism.

5. The stablecoin mechanism: The Reserve

Libra will work on a two-token system: The governance token called Libra Investment Token (LIT),

which will be held initially exclusively by the Founding Members, and the Libra coin. The latter aims

to be a stablecoin, at least a low volatility coin, backed by a pool of liquid assets that act as a collateral.

The Libra association will manage the Reserve which will be mostly made up of short-term

government bonds issued by the most reliable countries denominated across four fiat currencies

(USD, EUR, GBP and JPY).

The Libra coins supply will be consistently adjusted to demand via issuance and burning mechanism.

For each new Libra coin issued, the Reserve holdings should be increased by the market value of one

Libra. It will be pegged to this basket meaning that at any time, in theory, token holders would be

able to redeem their tokens against a portion of the assets kept in the reserve i.e., “FIAT” world

securities.



IV. LIBRA: POLITICAL AND REGULATORY FEEDBACK

Facebook is already familiar with financial services requirements and already has money transmitter

licenses in the USA and an e-money license in the European Economic area. As mentioned in their

2018 annual report “Payment transactions may subject us to additional regulatory requirements and

other risks that could be costly and difficult to comply with or that could harm our business”.

Regulators and politicians will ask themselves one important question: will Libra pose a systemic risk

to the global financial system? If yes, one should expect heavy requirements as well as changes in

the Libra governance … in the light of the initial reactions shown below:

Country Reaction

House of Representatives committee on Financial Services - 02.07: “Because Facebook is already in the hands of over a quarter of the world’s population, it is imperative that Facebook and its partners immediately cease implementation plans until regulators and Congress have an opportunity to examine these issues and take action”

M. Carney, Bank of England governor - 21.06: “It has to be safe, or it’s not going to happen (...) We, the Fed, all the major global central banks and supervisors, would have direct regulatory (oversight).”

B. Le Maire, Ministry of Finance - 02.07: “Facebook cannot create its own sovereign currency, (...) the attribute of state sovereignty must stay in the states’ hands and not in the hands of private companies with private interests. (...) I have asked all the G7 central banks governors to submit a report on the guarantees to be provided on this digital currency.”

Jens Weidmann, German central bank governor - 21.06: “(stablecoins) could undermine the deposit-taking of banks and their business models, this might disrupt transaction banking and financial market intermediation”

Huriko Kuroda, Japanese central bank governor - 20.06: “(...) will keep a careful watch for whether cryptocurrencies could gain acceptance as a method of payment, as well as how they might affect financial and payment systems”

Thomas Moser, Swiss National Bank member of the governing board - 25.06: Is “relaxed” about the Libra project, adding that” the company’s white paper looked professional and its initiators had indicated they wanted to play by the rules”

Mu Changchun, deputy director of the PBOC’s payment department - 06.07: “Digital currencies can be used for lending, could disrupt monetary policy, and induce foreign exchange risks in economies with a volatile local currency. (...) In the longer term, the yuan will be damaged by Libra if it’s not convertible. Making the yuan freely exchangeable would deal with that risk.”

The outcome of the negotiations to come will have far reaching implications (see next chapter).



V. WHAT’S NEXT?

“When a government prohibits any company from putting bearer notes into circulation, does it not

violate a rule of natural law that allows any man to enter into commitments, if he finds another

company that considers these commitments worthy of his trust?"22.

This interrogation from Jean-Baptiste Say is in line with the free banking theory which had a renewed

debate starting 1976 and Hayek’s book The Denationalisation of Money23 in which he argues that

governments should stop having a monopoly on the currency issuance and allow private issuers to

voluntarily compete to do so. To that extent, Facebook ambition of issuing its own currency is perhaps

the modern application of the free banking theory in a broad sense.

A) Roadmap

We believe Libra’s teams have to work on 4 levels:

● Technological: we believe it will be easy for Facebook to deliver on its roadmap and that

the platform will be ready technologically by 2020.

● Ecosystem: Facebook will continue to attract new members in the Libra association. At the

time of writing the Association is missing i) Banks and stock exchanges ii) Europe and Asian

representatives (although Libra is based in Geneva) iii) other big tech companies. Bold will

be the Banks that will enter the Association given the above statements and other big tech

companies might be afraid of reinforcing a rival.

● Compliance: the company will be forced to ramp-up its KYC and anti-money laundering

features in order to reinsure regulators, institutional partners, and avoid lofty fines.

● Regulatory levels: actively engage in discussions with politicians, regulators, central bankers

in order to ensure a future for Libra. These discussions are uncertain by design as Libra’s

scope is global and stakeholders have different interests. In addition, regulation in relation

to blockchain-based financial market infrastructure is still embryonic. Immediate next step:

the US House Financial Services Committee will hold a hearing on Libra on July 17.

22 Translated from Cours complet d’économie politique pratique: suivi des mélanges, correspondance et catéchisme d’économie politique, J-B. Say, 1836, Chapter XIX, p.227 23 Denationalisation of Money, F.A. Hayek, 1976



B) The mother of all battles: political

It is the first time in modern history that government-backed currencies could be seriously challenged

by private institutions. One should not expect large room for manoeuvre for Libra and Facebook, in

a time where protectionism is back on the global agenda and where GAFAM are subject to increased

political and public scrutiny on privacy, pricing, and competition issues.

A recent a July 2 letter from the US Representative Committee on Financial Services cannot be more

explicit “It appears that these [Facebook/Libra] products may lend themselves to an entirely new

global financial system that is based out of Switzerland and intended to rival U.S. monetary policy

and the dollar [...] it is imperative that Facebook and its partners immediately cease implementation

plans until regulators and Congress have an opportunity to examine these issues and take action”.

Scenario Description Next steps Probability

Slow negotiations

Facebook makes Libra a strategic priority and moves quickly on all dimensions mentioned in section A above. In particular, compliance dimensions are second to none and make Libra a “safe and compliant” platform. Facebook engages constructively with policy makers. It has - some - supporters from US policymakers that see Libra as a hedge against payment system failures and competition from Asian-based platforms. It also has fierce opponents (politicians, consumer groups) that might activate legal proceedings to slow down if not block the project. Facebook moves forward but slowly.

Facebook answers all open questions. It files for the required licenses in selected jurisdictions and/or partners with/acquires financial institutions to piggyback on their license. Any legal proceedings are escalated to supreme courts or similar to avoid blocking the project.

Medium

Rescope Facebook has poorly engaged with US and international policymakers. US congress and/or a series of G7 countries and central banks force Facebook to abandon or rescope the project. In addition, Facebook is threatened in its core business. Facebook traditional business leadership also recommends to stop putting at risk the whole franchise.

Facebook rescopes its Libra project on limited use cases in geography or even stops it completely and leaves it as an open-source contribution. Facebook acquires a “traditional” global payment system provider and deliver its vision on top of the latter (e-commerce first, then blockchain when dust settles)

Low/ Medium

First the US then the rest of the world

Facebook does not abandon on its vision but goes step by step. Political turmoil attention vanishes after Facebook strikes a federal or state level deal. This deal will be used as a blueprint for international negotiations.

Facebook scales rapidly in selected US states.

Low



Important disclosure

The information and opinions in this article were prepared by Taurus Group SA (“Taurus”). Taurus Group SA or the writer of this article may have a material financial interest in some digital assets (e.g., Ether, Bitcoin, Litecoin, Bitcoin Cash). Taurus does not provide individually tailored investment advices. This article has been prepared without regard to the circumstances and objectives of those who receive it. Taurus recommends that investors independently evaluate particular investments and strategies, and encourages investors to seek the advice of a financial adviser. The appropriateness of an investment or strategy will depend on an investor's circumstances and objectives. The securities, instruments or digital assets discussed in this article may not be suitable for all investors, and certain investors may not be eligible to purchase or participate in some or all of them. This paper is not an offer to buy or sell or the solicitation of an offer to buy or sell any digital assets or to participate in any particular trading strategy. The value of digital assets may vary a lot because of changes in interest rates, foreign exchange rates, default rates, prepayment rates, securities/instruments prices, market indexes, operational or financial conditions of companies or other factors. Past performance is not necessarily a guide to future performance. Estimates of future performance are based on assumptions that may not be realized. If provided, and unless otherwise stated, the closing price on the cover page is that of the primary exchange for the subject company's securities/instruments. This article is based on public information. Taurus makes every effort to use reliable, comprehensive information, but we make no representation that it is accurate or complete. We have no obligation to tell you when opinions or information in our research change. Taurus or writers of this article may make investment decisions that are inconsistent with the views in this article.

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July Libra Version Finale - Taurus Group...Libra: Taurus’ view on Facebook’s cryptocurrency project - July 2019 6 David Marcus, the former President of Paypal, Facebook has the