Bigtech, Stabletech, and Libra Coin - New Dawn, New Challenges, New Solutions

• Author: G. A. Walker
• Pages: 303-381

Bigtech, Stabletech, and Libra Coin – New

Dawn, New Challenges, New Solutions

G. A. W

ALKER

*

Computer programmers, coders, and technology engineers have

promoted the advantages of innovative new digital systems and tools for over

a decade since the introduction of Bitcoin by Satoshi Nakamoto in a 2008

White Paper.

1

Distributed ledger technology (DLT), blockchain, and smart

contracts were meant to herald a new dawn in choice, efficiency, and

security. Regulatory and monetary authorities have monitored

developments usually from a distance and on a technology neutral basis. No

major disruptions in terms of monetary or systemic instability concerns have

been identified, principally due to the limited size and scalability of the new

technology. This would all change with the potential and imminent launch

of Libra. Libra represents the most significant advance in digital coin

technology (CoinTech) or token technology (TokenTech) since Bitcoin was

launched. With its value fixed to a basket of currencies or single currency

option, Libra constitutes a new advance in stablecoin technology

(StableTech).

2

This represents a major disruptive event or “Big Bang” in

CoinTech and payment technology (PayTech) within a larger new area of

data technology and DataTech.

3

Facebook has specifically created a new

form of BigTech coin (BigCoin or SuperCoin) which parallels the super

digital applications (SuperApps) such as those developed by AliPay and

WeChat in China.

4

* Professor G. A. Walker, Professor in International Financial Law and Financial

Technology (FinTech) Law, Centre for Commercial Law Studies (CCLS), Queen Mary

University, London.

1. See generally S

ATOSHI

N

AKAMOTO

, B

ITCOIN

: A P

EER

-

TO

-P

EER

E

LECTRONIC

C

ASH

S

YSTEM

(2008).

2. See discussion infra Section I.

3. Dirk A. Zetzsche, et al., The Future of Data-Driven Finance and RegTech: Lessons from EU

Big Bang II (Eur. Banking Inst., Working Paper 2019/35, 2019). See also Dirk A. Zetzsche, et

al., Regulating Libra: The Transformative Potential of Facebook’s Cryptocurrency and Possible

Regulatory Responses (Eur. Banking Inst., Working Paper Series 29/44, 2019) (describing the

development of new database regulation within the European Union in response to the

development of data driven finance as constituting as Big Bang).

4. AliPay and WeChat were able to develop fully integrated mobile applications that allowed

consumers to enjoy a full range of banking and financial services through a single programme.

This can be referred to as a “SuperApp.” See generally 2019 BIS Ann. Rep. (June 23, 2019),

https://www.bis.org/publ/arpdf/ar2019e.pdf; Jon Frost, et al., BigTech and the Changing Structure

of Financial Intermediation, (BIS, Working Paper No. 779, April 8, 2019), https://www.bis.org/

publ/work779.pdf; Dennis Ferenzy, A New Kind of Conglomerate: BigTech in China, I

NST

. I

NT

’

L

F

IN

. (IIF) (Nov. 2018), https://www.iif.com/Portals/0/Files/chinese_digital_nov_1.pdf.

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304 THE INTERNATIONAL LAWYER [VOL. 53, NO. 3

Digital technology has created a new world based on digital information

and digital data with many markets, economies, and societies more generally

becoming data driven. Massive difficulties nevertheless arise in determining

the nature of information, data, and new forms of digital assets.

5

This

includes digital coins or cryptocurrencies and other tokenized assets

6

and, in

particular, whether these constitute property in law. Over 8,450 new digital

coins and tokens have been created in recent years.

7

A substantial number of

new digital financial platforms have also been launched. Separate issues arise

in classifying all of the different types of digital coins and tokens created.

8

A

new digital ecosystem has been created that requires a separate revolution in

legal and regulatory language and analysis to understand and manage.

New technology (NewTech) has advanced immeasurably in recent

decades. This includes core or infrastructure technology (InfraTech)

9

and

new applied technology (AppliedTech), which can both be considered to

form part of new FutureTech.

10

Many aspects of CoinTech and PayTech as

well as wider FutureTech will be brought together for the first time with the

Libra experiment and LibraTech. This includes DLT and decentralization,

coin creation, identification, cryptography, ledger, hashing, consensus,

structure, wallet provision, connection or interoperability, and code and

5. Walker defines information as any statement or point of fact, opinion or law with data

being structured information collected in accordance with set parameters or constraints.

Knowledge represents processed or applied information or data used in accordance with specific

policy objectives. See generally G.A. Walker, Digital Information Law - Meaning, Challenge and

Future, 53 I

NT

’

L

L

AW

. (forthcoming 2020).

6. Tokenisation refers to the use of digital tokens on blockchain or other distributed ledgers

to represent other real assets possibly held on a separate physical or electronic register such as

for land, ships, aircraft, automobiles or precious metals. See The Latham & Watkins Glossary of

Cryptocurrency & Blockchain Technology Acronyms, Slang, and Terminology, L

ATHAM

& W

ATKINS

33 (2019), https://www.lw.com/admin/Upload/Documents/Book_of_Jargon_Cryptocurrency_

Blockchain_Technology.pdf.

7. A twelve-part chronology can be constructed of the history of digital coins and tokens

based on: Bitcoin; Bitcoin Correction; Consensus & Layering; Digital Coin Extensions;

Payment Tokens; Anonymity & Privacy; Stablecoins; Smart Contracts; Digital Tokens;

Experimentation; Initial Coin Offerings (ICOs); Governance & Innovation.

8. An eight-part taxonomy can be constructed for the purposes of this paper using formal

legal and regulatory definitions based on: Exchange or Monetary token; Real asset token;

Utility token; Security debt token; Security equity token; Community token; Donation token;

and Reward token. On taxonomies, see G.A. Walker, Regulatory Technology (RegTech)

Construction of a New Regulatory Policy and Model 54 I

NT

’

L

L

AW

. (forthcoming 2021) Section 4(3)

and (note 245).

9. This includes micro, parallel, and quantum computing, cloud, fog, and edge computing,

telecommunications, blockchain and graph technology (such as Directed Acyclic Graphs

(DAGs)), decentralisation and DLT and further advances in internet and world wide web

service provision.

10. This includes digital coding, automation and smart contracts, biometrics and advanced

cryptography, Big Data analytics, applied robotics, nanotechnology and biotechnology,

machine reading, machine learning and machine intelligence and Artificial Intelligence (AI) and

Machine Sentience (MS).

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2020] BIGTECH, STABLETECH, & LIBRA COIN 305

governance.

11

Facebook has decided to confront all of these technical

challenges directly in a public and transparent manner. The development of

private StableTech also places increased pressure on national monetary

authorities to develop new forms of central bank digital currency (CBDC or

possibly CentralTech) as an alternative or replacement payment option.

Facebook has also announced that it will attempt to resolve all of the

separate legal and regulatory challenges that arise in an equally direct and

open manner.

12

The fundamental difficulty that arises is an inherent conflict

between global technology and local control, which cannot be managed

through existing supervisory and regulatory means.

13

A separate single

market and local access and control conflict was created within the European

Union and other regional markets.

14

This has re-emerged as a virtual and

real or domestic law conflict has emerged more recently with the growth of

the Internet and online commercial, banking, and financial services. This

creates its own conflict between new technology and traditional market

supervisory and regulatory practices. A more fundamental underlying law

and code conflict also arises with a shift to computer programming and

automation in terms of regulatory control. All of this can be resolved

through the creation of a single global technology ecosystem around Libra

coin and LibraTech with supervision and regulation continuing to be

managed on an a fragmented and essentially uncoordinated and distinct local

and domestic basis.

International authorities have been monitoring developments in the area.

A number of papers have been issued on cryptocurrencies,

15

cryptoassets,

16

11. This creates a twelve-point technical architecture based on: decentralisation; asset

digitalisation; identity digitalisation; access cryptography; transaction hashing; record

(transaction or account) structure; reconciliation or consensus mechanism; block or graph

format; interface and wallet provision; linkage and interoperability; computer code; and

governance. This can be restated and summarised in terms of: architecture; asset; anonymity;

access or availability; arrangement; authentication; accord or agreement; assembly;

administration; attachment; authority; and accountability, assessment and amendment. On the

difficulties that arise with regard to Libra, see discussion infra Section VI.

12. Id.

13. See generally G.A. W

ALKER

, I

NTERNATIONAL

B

ANKING

R

EGULATION

L

AW

P

OLICY AND

P

RACTICE

(Kluwer London 2006) (summarising the core difficulty that arises with regard to

international financial market management in terms of an essential single global market and

local control conflict).

14. See generally G.A. W

ALKER

, E

UROPEAN

B

ANKING AND

F

INANCIAL

P

ROGRAMME

(BCCI

London 2011) (constructing a parallel perspective based on regional trading systems such as the

European Union).

15. See Eur. Banking Auth. [EBA], EBA Opinion on ‘Virtual Currencies’, EBA/Op/2014/08 (July

4, 2014); Dong He, et al., Virtual Currencies and Beyond: Initial Considerations, SDN 16/03, I

NT

’

L

M

ONETARY

F

UND

[IMF] (Jan. 20, 2016); Fin. Conduct Auth. [FCA], Discussion Paper on

Distributed Ledger Technology, DP17/3 (Apr. 2017); Fin. Conduct Auth. [FCA], Fair Pricing in

Financial Services: Summary of Responses and Next Steps, FS19/04 (July 2019); Robby Houben &

Alexander Snyers, D

IRECTORATE

-G

ENERAL FOR

I

NTERNAL

P

OLICIES OF THE

U

NION

(E

UROPEAN

P

ARLIAMENT

), Cryptocurrencies and Blockchain, Legal Context and Implications for

Financial Crime, Money Laundering and Tax Evasion, PE 6.19.024, at 23, (July 9, 2018), https://

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