Facebook plans to launch 'GlobalCoin' cryptocurrency in 2020
Facebook plans to launch 'GlobalCoin' cryptocurrency in
2020
Mark Zuckerberg met governor of Bank of England last
month to discuss decision
Mark Sweney Fri 24 May 2019 13.40 EDT
Facebook is planning to launch its own cryptocurrency in
early 2020, allowing users to make digital payments in a dozen countries.
The currency, dubbed GlobalCoin, would enable Facebook’s
2.4 billion monthly users to change dollars and other international currencies
into its digital coins. The coins could then be used to buy things on the
internet and in shops and other outlets, or to transfer money without needing a
bank account.
Mark Zuckerberg, the founder and chief executive of
Facebook, last month met the governor of the Bank of England, Mark Carney, to
discuss the plans, according to the BBC.
Zuckerberg has also discussed the proposal, known as
Project Libra, with US Treasury officials and is in talks with money transfer
firms, including Western Union, to develop cheap, safe ways for people to send
and receive money. A report last year said Facebook is working on a
cryptocurrency that would let users transfer money using WhatsApp, its
encrypted mobile-messaging app.
“Payments is one of the areas where we have an opportunity
to make it a lot easier,” Zuckerberg told the company’s developer conference
last month. “I believe it should be as easy to send money to someone as it is
to send a photo.”
In order to try to stabilise the digital currency the
company is looking to peg its value to a basket of established currencies,
including the US dollar, the euro and the Japanese yen.
Facebook is also looking at paying users fractions of a
coin for activities such as viewing ads and interacting with content related to
online shopping, similar to loyalty schemes run by retailers.
However, experts believe that regulatory issues and
Facebook’s poor track record on data privacy and protection are likely to prove
to be the biggest hurdles to making the currency a success.
“Facebook is not regulated in the same way as banks are,
and the cryptocurrency industry is, by definition almost, unregulated,” said
Rebecca Harding, chief executive of banking trade data analytics firm Coriolis
Technologies.
“In the UK, for example, there are no formal laws that
govern this market because cryptocurrencies are not legal tender. Facebook has
also had issues with protecting user data in the past few years and this may
well be an issue for it as it tries to provide guarantees to users that their
financial information is safe.”
Following an Observer investigation last year, it emerged
that the data of up to 87 million Facebook users had been used improperly by
Cambridge Analytica to target ads for Donald Trump in the 2016 US presidential
election.
Earlier this month the US Senate committee on banking
wrote an open letter to Zuckerberg asking how the currency would work, what
consumer protection would be offered and how data would be secured.
It has also emerged that Zuckerberg held talks with the
billionaire Winklevoss twins, Cameron and Tyler, whose bitter legal battle over
the origins of Facebook was chronicled in the film The Social Network. The
twins, who went to Harvard with Zuckerberg and later sued him for stealing
their idea for a social network, founded the cryptocurrency exchange, Gemini,
in 2014.
In the highly unregulated world of cryptocurrencies
Gemini is notable as being one of the first two companies to win regulatory
approval to launch a digital currency pegged to the US dollar, the Gemini
dollar.
It emerged last month that Facebook is looking for $1bn
(£790m) in funding to support the project, and has held talks with payments
giants including Visa and Mastercard.
Facebook has been long expected to make a move in
financial services, having hired the former PayPal president David Marcus to
run its messaging app in 2014. Marcus, a board member of crypto exchange
Coinbase, runs Facebook’s blockchain initiatives, the technology on which
cryptocurrencies run.
In February JP Morgan became the first major US bank to
create its own cryptocurrency, JPM Coin, as a way for its clients to settle
payments.
Comments
Post a Comment