Some members of the Libra Association, the entity behind the Libra Project, switched sides recently. They are now supporting a rival project named Celo Dollar.
Based on reports, the Celo Alliance for Prosperity project announced its partners and they include some Libra Association supporters such as Anchorage. As well as, Bison Trails Co., Coinbase Ventures, Andreessen Horowitz and Mercy Corps.
The Celo Alliance for Prosperity project claims it’s designed to deliver humanitarian aid. Alongside facilitating payments and enabling microlending through a cryptocurrency called the Celo Dollar, which is slated to launch sometime next month.
The decision by these organizations to support the Celo Alliance for Prosperity project doesn’t come as a surprise. Due to the fact that by backing Celo, some of Libra’s remaining members essentially hedge their bets.
Diogo Monica, President of Anchorage said in a statement: “Celo and Libra each have unique focuses and approaches. But they share a goal that Anchorage strongly believes in, banking the unbanked. As advocates for a more fair and open financial system working to support every protocol our clients wish to participate in, it’s our duty to support both.”
Chuck Kimble, Head of the Alliance for Prosperity project also admitted to similarities between the Celo project and Libra’s.
“There are some similarities in terms of mission, which is why there are some people who have joined both alliances,” he said.
Possible regulatory hurdles
Libra faced regulatory scrutiny and criticisms from its origin majorly because of Facebook’s involvement. But, Celo may be able to avoid such since such an entity doesn’t exist in its plans. However, the Celo project lacks a crucial part of the Libra project, which is a 2 billion monthly active users. The project also needs to compete with existing payment networks like PayPal Holdings Inc.
Concerning regulations, Kimble explained that they’ve met with governments and central banks around the world. Also, he added that they’re continually engaging with the governments in the many countries they hope to serve.
How the Celo dollar project works
The Celo is designed as a stablecoin. But unlike other blockchains, payments with Celo get sent to the recipient’s phone numbers instead of using complex addresses. This feature will possibly increase the adoption of the project.
Additionally, the value of the Celo Dollar will be pegged to the U.S. dollar and backed by a reserve of other cryptocurrencies. It’ll be available in the U.S., but the major focus remains in Latin America, Africa, and Southeast Asia.
Notably, Celo isn’t trying to replace the US dollar or act as a dollar alternative. But, its reserve is backed with other digital currencies rather than fiat money, like Libra. This is expected to pacify regulators since the cryptocurrency cannot impact the global financial world.