Facebook unveiled plans to launch a cryptocurrency called Libra, the latest initiative in its effort to expand beyond social networking and move into e-commerce and global payments, Reuters reports.
The company has linked with 28 partners in a Geneva-based entity called the Libra Association, which will govern its new digital coin set to launch in the first half of 2020, according to the report.
Facebook has created a subsidiary called Calibra, which will offer digital wallets to save, send and spend Libras.
Calibra will be connected to Facebook’s messaging platforms Messenger and WhatsApp.
Facebook hopes the launch will not only power transactions between established consumers and businesses around the globe, but offer unbanked consumers access to financial services for the first time.
The name “Libra” was inspired by Roman weight measurements, the astrological sign for justice and the French word for freedom, Reuters quoted David Marcus, a former PayPal executive who heads the project for Facebook, as saying.
“Freedom, justice and money, which is exactly what we’re trying to do here,” he said.
Facebook also appears to be betting it can squeeze revenue out of its messaging services through transactions and payments, something that is already happening on Chinese social apps like WeChat.
The Libra announcement comes as Facebook is grappling with public backlash due to a series of scandals, and may face opposition from privacy advocates, consumer groups, regulators and lawmakers, Reuters noted.
In recent years, cryptocurrency investors have lost hundreds of millions of dollars through hacks, and the market has been plagued by accusations of money-laundering, illegal drug sales and terrorist financing.
Facebook has engaged with regulators in the US and abroad about the planned cryptocurrency, company executives said.
The US tech giant hopes it can bring global regulators to the table by publicizing Libra, said Kevin Weil, who runs product for the initiative.
“It gives us a basis to go and have productive conversations with regulators around the world,” said Weil. “We’re eager to do that.”
Partners in the project include Mastercard, Visa, Spotify Technology, PayPal Holdings, eBay, Uber Technologies and Vodafone Group, as well as venture capital firms like Andreessen Horowitz.
They hope to have 100 members by Libra’s launch during the first half of 2020. Each member gets one vote on substantial decisions regarding the cryptocurrency network and firms must invest at least US$10 million to join. Facebook does not plan to maintain a leadership role after 2019.
Though there are no banks among the inaugural members, there have been discussions with a number of lenders about joining, the report cited Jorn Lambert, executive vice president for digital solutions at Mastercard, as saying.
They are waiting to see how regulators and consumers respond to the project before deciding whether to join, he said.
The Libra Association plans to raise money through a private placement in the coming months, according to a statement from the association.
Calibra will conduct compliance checks on customers who want to use Libra, using verification and anti-fraud processes that are common among banks, Facebook said on Tuesday.
The subsidiary will only share customer data with Facebook or external parties if it has consent, or in “limited cases” where it is necessary, the company said. That could include for law enforcement, public safety or general system functionality.
Transactions will cost individuals less than merchants, Facebook said. Each Libra will be backed by a basket of government-backed assets.
The company plans to refund customers who lose money because of fraud.
Sri Shivananda, Paypal’s chief technology officer, told Reuters that the project is still in its “very, very early days,” and there were conversations in progress with regulators.
Mastercard’s Lambert characterized Libra similarly, noting much needs to happen before the launch.
If the project receives too much regulatory pushback, he said, “we might not launch.”
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