Facebook Crypto Coin Gets Backing -- WSJ
14 June 2019 - 5:02PM
Dow Jones News
Visa, PayPal and Uber to invest $10 million each in payments
system called Libra
By AnnaMaria Andriotis, Peter Rudegeair and Liz Hoffman
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (June 14, 2019).
Facebook Inc. has signed up more than a dozen companies
including Visa Inc., Mastercard Inc., PayPal Holdings Inc. and Uber
Technologies Inc. to back a new cryptocurrency it plans to unveil
next week and launch next year.
The financial and e-commerce companies, venture capitalists and
telecommunications firms will invest around $10 million each in a
consortium that will govern the digital coin, called Libra,
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.
The Wall Street Journal reported last month that Facebook was
recruiting backers to help start the crypto-based payments system
and was seeking to raise as much as around $1 billion for the
effort.
In the works for more than a year, the secretive project
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 isn't known, 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 U.S. and elsewhere are
high. Some members have expressed concerns that the token could be
used to launder money and finance terrorist organizations, some of
the 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 verify transactions and maintain 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 company 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 co-sign the paper,
some of the people said.
Write to AnnaMaria Andriotis at annamaria.andriotis@wsj.com,
Peter Rudegeair at Peter.Rudegeair@wsj.com and Liz Hoffman at
liz.hoffman@wsj.com
(END) Dow Jones Newswires
June 14, 2019 02:47 ET (06:47 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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