Facebook, Libra, the SEC, and the CryptoworldFacebook is looking to get in on the crypto act. Will U.S Congress and other governments let FB roll out a crypto payment service to more than 2bn users?
It’s been a while since there has been any talk of a big U.S corporate entering the crypto space. The news wires have been particularly active going into this week on news of Facebook looking to enter the world of crypto.
In a bid to compete with the likes of Telegram, which is about to launch its very own ICO, Facebook is looking to get in on the act.
The announcement came on Tuesday. Over the last year, speculation had been on the rise of a likely plan to launch its very own cryptocurrency.
Facebook had for a very short time banned cryptocurrency advertising on its platform. The very fact that the ban had led to speculation of a FB move into the crypto world likely contributed to the reversal of the ban back in May.
Facebook has named its cryptocurrency Libra and its digital wallet Calibra and the scheduled launch is in 2020.
The Facebook team is taking advantage of its wide client base, enjoyed across Facebook, Facebook Messenger and WhatsApp. As well as making Calibra available as a standalone, it will also be available to Facebook Messenger and WhatsApp users.
Similar to the platforms that have been developed by Telegram and WeChat, Facebook Messenger and WhatsApp will enable users to send and receive Libra.
Unsurprisingly, Facebook has some heavyweight support for the planned launch including, but not limited to Visa, Mastercard, and even Uber.
The launch of Bitcoin and other true cryptocurrencies, not only targeted financial institutions, but also the unbanked.
Facebook’s reach and WhatsApp platform would certainly eat into the more than 1 billion unbanked across the globe.
What’s different between Libra and Bitcoin and other alternatives to fiat money?
Similar to Tether, the plan is for Libra to be a stablecoin. Fiat currencies and government bonds will be among the asset-based that will be used as a reserve to support Libra.
While the concept is certainly a mouth-watering proposition, there are some question marks over Facebook’s latest move.
There have been a number of privacy breaches of late. Back in 2018, hackers were responsible for stealing messages from more than 80,000 accounts. When considering the fact that Facebook Messenger will be used to send and receive funds, this is a concern.
Data protection has been another issue. Earlier in the year, a data breach publicly exposed Facebook user data. More than 500 million data points made it to the public domain on this occasion.
When considering the fact that there are reportedly more than 2.3bn active monthly users of Facebook, it’s not just data breaches and security that will be of concern…
Reports hit the news wires overnight of U.S Congress calling on Facebook to end its move into the crypto world.
It’s not surprising that, when considering the lack of regulatory oversight on Facebook users, U.S politicians have balked at the prospect of a Libra crypto.
Users would ultimately be able to bypass jurisdictional laws and send and receive money under the radar of the likes of the SEC.
Congress has jumped on the data breach bandwagon as its reason to attempt to thwart Facebook’s bid to enter the cryptosphere. One would hazard a guess, however, that there is a little more to it than just data breaches.
Mark Zuckerberg will most likely have to face Congress on the latest bid to compete with the banking world. He will need to be a little more willing to address questions this time around. Until now, Zuckerberg has shown an unwillingness to face the fire, which will be of further concern to lawmakers in the U.S and beyond.
If Facebook Inc. can convince Congress and governments elsewhere, however, Libra could become quite the alternative to fiat money.
It is Facebook’s intention to charge a minimal transaction fee for each remittance. That would certainly beef up the Facebook coffers…
Will it be the end of the likes of Bitcoin and Litecoin? With Telegram’s ICO due to kick-off next month and Facebook looking to enter the space, the forefathers of the crypto world will need to step up to the plate to stay afloat.
Facebook, Inc (“FB) shares failed to benefit from the announcement, falling by 0.29% on Tuesday. The day loss was in stark contrast to Kodak’s 119% rally in January of last year. The Kodak rally came from news that it would be launching its own blockchain.