Libra Isn't a Cryptocurrency. It's a Glimpse of a New Asset Class

Coming from an organization so tied to the question of identity, it is surprising that Facebook's Libra coin seems confused about its own.

The organization has chosen to brand Libra "a stable global cryptocurrency," and the label "Cryptocurrency" has been replicated by media around the world.

Libra does not yet fulfill that criteria, and although the Foundation has said it plans to move towards a "More decentralized" system over time, doing so is entirely in its hands.

The value of a Libra coin is not created by the underlying technology, the market, math or however you choose to understand bitcoin and similar assets.

The only thing Libra coin has in common with cryptocurrencies is that they all move on a blockchain.

Where Libra differs from its stablecoin peers is in the peg: according to the white paper, it will be backed by "a basket of bank deposits and short-term government securities".

Notice the use of the term "Securities." An asset backed by securities is, by definition, also a security.

Libra is more like an ETF than a fiat-backed stablecoin.

If the Libra token is officially classified as a security, as is likely, then using it in a transaction will involve a "Sale" of that security, and a capital gain or loss.

The main impact will come not so much from Libra itself, but in the glimpse it offers of where a new asset class could emerge.