Daily Management Review

Facebook Is Creating A Stablecoin For Its WhatsApp Users


Eyeing the Indian remittance market, Facebook is busy strategising over rolling out a new crypto-currency for its Whatsapp users.

Last month, Bloomberg reported that Facebook was busy in creating a crypto-currency, whereby enabling the users of WhatsApp messenger to carry out monetary transactions through the app, while the focus remains first in Indian “remittances market”.
Sources seeking anonymity revealed that the crypto-currency being developed by Facebook is a stablecoin, “a type of digital currency pegged to the U.S. dollar”, for minimizing volatility. However, Facebook won’t be rolling out the feature anytime soon as the strategies of the process are still being worked out which includes a plan for “custody assets, or regular currencies” for protecting the stablecoin’s value.
There was been a long expectations for Facebook into plunge into financial services especially once the company hired David Marcus, the ex-president of PayPal, in 2014, to manage the Messenger app. Marcus took change of the block-chain initiatives of the company, the details of which have not been made public. According to a statement of a company spokesperson:
“Like many other companies, Facebook is exploring ways to leverage the power of blockchain technology. This new small team is exploring many different applications. We don’t have anything further to share.”
WhatsApp has found a popular place in Indian market, while the country is a world leader in remittance market, reported the World Bank, as “people sent $69 billion home to India in 2017”. In recent years, crypto projects on stablecoins have seen a boom, while a website, called Stable.Report, tracking the stable tokens informed that at some point over hundred and twenty initiatives related to the theme were in motion. The idea behind this digital coin was to create something less volatile in comparison to the likes of bitcoin which could be easily used for “daily purchases”.
However, executing the same idea has not been an easy task as “at least one high-profile project shuttered in recent weeks”. Recently, one such stablecoin named Basis had been closed after eight months of operation. While Bloomberg reported that:
“The Hoboken, New Jersey-based company said there was no apparent way around being classified as a security as opposed to a currency, which could significantly reduce the number of potential buyers. The swift collapse came after Basis drew well-known backers like Andreessen Horowitz and Kevin Warsh, a former governor of the U.S. Federal Reserve”.
Tether, perhaps, is the “most high-profile stablecoin” till date but unfortunately it finds itself under controversial pressure. The designers of Tether, however, claim that each token are backed by a “U.S. dollar”. Nevertheless, the company has refused to undergo audit scrutiny, whereby giving rise to more questions.
Facebook has “2.5 billion global users” and generates over “$40 billion” annual revenue, thus it possesses “a better chance of making a stablecoin that sticks”. In fact, Facebook might be the “first large technology company to launch such a project”.