Facebook has signed up a who’s who of tech and financial powerhouses to back its forthcoming stablecoin, including Mastercard, Visa, PayPal, and Uber, the Wall Street Journal reported on June 13.
The social media giant plans to unveil details of its secretive cryptocurrency with the release of a white paper next week, the paper added. Facebook will not control the new cryptocurrency but will spearhead the Libra Association, a consortium of investors from the finance, e-commerce, venture capital, and telecommunications industries that have all invested about $10 million. The cryptocurrency development is called Project Libra internally at Facebook, which is trying to raise $1 billion to fund it.
Unnamed sources cited by the Journal said that Facebook does not appear to want to control the project, and some of the partners will maintain blockchain nodes for the project.
Facebook is believed to want GlobalCoin to be at the heart of a broad system of payments and e-commerce, using its 2.4 billion users and 1.5 billion WhatsApp messaging service users around the globe to create a user base that actually buys and sells with cryptocurrency—something that has so far eluded Bitcoin (BTC) and its competitors.
Based on Facebook’s comments at its F8 developer conference in April, the company does seem set on becoming an e-commerce provider, with WhatsApp preparing to host online catalogs, Facebook adding shipping service support, and Instagram getting ready to let influencers sell products directly to followers.
While the size of that audience has been enough to get major financial and payment firms onboard, the regulatory challenges it faces remain formidable. Last week, outgoing Commodity Futures Trading Commission (CFTC) Chair Christopher Giancarlo told the Financial Times Facebook was only at the early stages of talks with various regulators. And almost no countries have a settled regulatory regime in place.
The cryptocurrency will be pegged to a basket of major fiat currencies, not just the U.S. dollar, to keep its value from being too volatile. That will also help its aspiration to create a truly international digital coin. Other backers include online travel site Booking.com, online payment processor Stripe, and Argentinian e-commerce site MercadoLibre, the Journal reported.
Still, reports suggest the project is far from finalized, with some consortium members unsure of what their roles will even be and still concerned about the potential for GlobalCoin to be used for money laundering and the funding of terrorism.