Facebook's new cryptocurrency gets new backers
NEW YORK. KAZINFORM Facebook has signed up more than a dozen companies including Visa, Mastercard, PayPal and Uber Technologies to back the new cryptocurrency that the social-media giant plans to unveil this week, according to a report from the Dow Jones Newswires made available to EFE on Friday.
The collection of financial firms and e-commerce companies will invest around $10 million each in a consortium that will govern the digital coin, according to people familiar with the matter. The money would be used to fund the creation of the coin, which will be pegged to a basket of government-issued currencies to avoid the wild swings that have dogged other cryptocurrencies, they said, EFE reports.
The Wall Street Journal reported last month that Facebook was recruiting financial firms and online merchants to help launch the crypto-based payments system and was seeking to raise around $1 billion for the effort, code-named Project Libra. The secretive project, in the works for more than a year, revolves around a digital coin that its users could send to each other and use to make purchases both on Facebook and across the internet.
Talks with some of the partners are ongoing, and the group's eventual membership may change, the people added.
A Facebook spokeswoman declined to comment.
It has been a decade since bitcoin was born, yet consumers hardly use it or the hundreds of other cryptocurrencies to pay for things. Facebook is betting it can change that with a crypto-based payments system built around its giant social network and its billions of users.
It is still not entirely clear, even to some members of the consortium, how the coin will work or what their roles will be, people familiar with the project said. Regulatory hurdles in the United States and elsewhere are high.
Some members have expressed concerns that the token could be used to launder money and finance terrorist organizations, some of people said, a persistent problem with bitcoin and other cryptocurrencies.
Facebook won't directly control the coin, nor will the individual members of the consortium known as the Libra Association. Some of the members could serve as "nodes" along the system that verifies transactions and maintains records of them, creating a brand-new payments network, according to people familiar with the setup.
Financial-technology firm Stripe Inc., travel-reservation site Booking.com and Argentina-based e-commerce site MercadoLibre Inc. have signed on to the project, some of the people said, an indication of its international ambitions.
Keeping the cryptocurrency network separate from Facebook's platform gives the social-media giant some cover with users and regulators should problems arise, a big advantage at a time when it is under pressure to address privacy shortcomings. Yet Facebook, as the developer of the underlying technology, could exert considerable influence over it.
Still, the lure of Facebook's nearly 2.4 billion monthly active users was too strong for many companies to pass up. Card companies have long fretted that a technology giant could muscle into their business, creating a payment option that cuts out card networks. Participating in Libra allows them to closely monitor Facebook's payment ambitions while sharing in the upside should the project gain traction with consumers.
Facebook plans to release a white paper introducing the coin next week, according to people familiar with its plans, adopting a format popularized by bitcoin's pseudonymous creator, Satoshi Nakamoto.
The company has asked consortium members to cosign the paper, some of the people said.