Facebook.Inc will make its first mark in the payment sector by creating a stablecoin that will enable users on their encrypted messaging platform, WhatsApp, to send money.
Persons familiar with the matter told Bloomberg that Facebook's version of stablecoin would be pegged to the U.S dollar and rolled out first to the Indian remittance market where WhatsApp has 200 million users.
At this point, the possible launch date was not provided. What was given away is that the Facebook blockchain team is still evaluating the strategy to be used for the stablecoin and weighing up custody options as well as the currencies that will be used to hold cash reserves.
Rumors that Facebook was going to open a payment arm have been in the air since 2014 when the social media giants hired then PayPal President David Marcus. It has taken four years since then for the cryptocurrency payment system to mature, and now Facebook looks ready to dive in except that they are still evaluating their stablecoin strategy.
Will Facebook Solve The Basis Puzzle?
The fact that Facebook is taking time to figure out which model to use for their proposed stablecoin easily remind us of the Basis stablecoin project which shut down in the past week.
Basis could not find a way to implement the stablecoin strategy they had in mind, of course, without falling prey to securities law.
The startup wanted to sell secondary tokens to its major investors and then issue the primary stablecoin to traders. However, the regulatory requirement would imply that the secondary token would be classified as a security, thus limiting the number of people who could buy it.
Will Facebook find a way around this stablecoin puzzle or invent a new stablecoin strategy?
We cannot say for sure. But we do know that whichever way the firm decides to go, they already have the revenue ($40 billion annually), users (2.5 billion globally), and experience required to swim along or against the regulatory tide.
So we’ll hold our breath and see whether Facebook can claim a top spot in the crypto industry by solving one of the most difficult challenges that it faces.
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