Facebook Reportedly Developing Crypto Stablecoin Targeting India’s Remittanceby Fintechnews Singapore January 2, 2019
Facebook is reportedly working on a cryptocurrency for global payments on its WhatsApp messaging app. The project will first focus on the Indian remittances market, people familiar with the matter told Bloomberg.
Facebook is developing a stablecoin, a cryptocurrency pegged to a fiat currency, though the firm is still far from releasing it as it’s still working on the strategy, including plan for custody assets, or regular currencies that would be held to protect the value of the cryptocurrency, the people told the news outlet.
Rise of the stablecoins
Stablecoins have become all the rage in the blockchain space with numerous projects emerging throughout 2018. These promise to be immune to the wild valuation swings inherent to cryptocurrencies all the while offering advantages such as being borderless, offering a way to deposit money more quickly than a bank account, in addition to being far easier to use on daily purchases than cryptocurrencies such as bitcoin.
Yet, there are still no examples of proven and successful stablecoins. Basis recently closed after less than two years in operation citing regulatory concerns. The startup raised US$133 million in August 2018 from backers including Andreessen Horowitz and Kevin Warsh, a former governor of the US Federal Reserve. Meanwhile, Tether, one of the most talked about stablecoins, has been surrounded by controversy. Despite creators claiming the token is backed by US dollar, the company’s refusal to be audited has raised questions about whether that’s truly the case.
Facebook’s blockchain moves
With 2.2 billion global users for its core social network, 1.5 billion for WhatsApp, 1.3 billion for Messenger, a further one billion via Instagram, and more than US$40 billion in annual revenue, Facebook would be the first large tech company to launch such a project.
“If Facebook launches the stablecoin they are reportedly building, it will quickly become the most used product in crypto,” tweeted Anthony Pompliano, a cryptocurrency analyst and founder and partner at Morgan Creek Digital Assets. He added: “The Indian government has been fighting crypto too so things are about to get very, very interesting.”
Facebook hired former PayPal president David Marcus to run its Messenger app in 2014, who then became the head of the company’s blockchain initiatives. The firm has been on a hiring spree and now has about 40 people in its blockchain group, Bloomberg noted, pointing out to employee titles on LinkedIn. The team was set up in May 2018.
“Like many other companies, Facebook is exploring ways to leverage the power of blockchain technology,” a company spokesman said in a statement. “This new small team is exploring many different applications. We don’t have anything further to share.”
With more than 200 million active daily users, India is WhatsApp’s largest market and the leader in remittances with US$69 billion sent to India in 2017, according to the World Bank. In 2017, India registered 357 million Internet users, a figure projected to grow to 840 million by 2022, according to Cisco’s Visual Networking Index.
Facebook gets into financial services
Facebook’s stablecoin project hints at a broader ambition to tap into financial services and add more products to its ecosystem.
Facebook announced its payment feature in March 2015 which allows users to send and receive money over its Messenger messaging app. The social networking giant began expanding its financial services business overseas in 2016 when it registered Facebook Payments International Limited in Ireland, then Spain. Meanwhile, WhatsApp began testing peer-to-peer transactions in India in early 2018.
WhatsApp joins other global messaging applications, including Kakao, LINE and Telegram, which have already revealed plans to move into the blockchain space. Japan’s LINE and South Korea’s Kakao both launched their own blockchain networks in 2018, while Telegram is reportedly nearing the launch of its Telegram Open Network (TON), a project that raised a whopping US$1.7 billion in a private initial coin offering (ICO) last year.
Featured image: Facebook app, Pixabay.