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.
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.”
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.
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