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WhatsApp, the company's encrypted mobile messaging application, is popular in India with over 200 million users. Photo: Bloomberg
San Francisco: Facebook Inc. is working to create a cryptocurrency that will allow users to transfer money to their WhatsApp messaging app, focusing primarily on the remittance market in India, according to people familiar with the issue.
The company is developing a stablecoin – a type of digital currency anchored to the US dollar – to minimize volatility, he said, who asked not to be identified by discussing internal plans. Facebook is far from issuing the currency because it is still working on the strategy, including a custody plan, or regular currencies that would be held to protect the value of the stablecoin, people said.
For a long time, Facebook has expected to make a move in financial services, after hiring former PayPal president David Marcus to run his Messenger app in 2014. In May, Marcus became the head of the company's blockchain initiatives , which have not been publicly discussed in detail. Facebook has been on a hiring spree, and now has about 40 people in its blockchain group, according to employee headlines on LinkedIn.
"Like many other companies, Facebook is exploring ways to harness the power of blockchain technology," a company spokesman said in a statement. "This new small team is exploring many different applications, we have nothing else to share".
WhatsApp, the company's encrypted mobile messaging application, is popular in India with over 200 million users. The country is also a leader in the world of remittances: in 2017 people sent 69 billion dollars to India, the World Bank said this year.
Last year saw a boom in encryption projects related to stablecoin. At one point, there were more than 120 adventures related to this theme, according to Stable.Report, a website that tracks stable tokens. The concept was created to create a digital currency that would be much easier to use on daily purchases because it would be more stable than currencies like Bitcoin.
The idea has proved difficult to achieve in real life, with at least one high profile project closed in recent weeks. A stablecoin known as Basis was recently closed after eight months. The Hoboken company in New Jersey said there was no apparent way to be classified as security against a currency, which could significantly reduce the number of potential buyers. The rapid collapse came after Basis attracted well-known supporters such as Andreessen Horowitz and Kevin Warsh, former governor of the US Federal Reserve.
Perhaps the most high profile stablecoin to date, Tether, has also been surrounded by controversy. While the creators of Tether claim that each of its tokens is supported by a US dollar, the company's refusal to be reviewed has raised doubts about whether it is so.
Facebook, which has 2.5 billion global users, over $ 40 billion in annual revenue and more experience in dealing with regulatory issues, may have a better chance of creating a stablecoin that stands out. It would be the first major technology company to launch such a project. The company's relationship with India was fraught, mainly because some instances of false news spread through WhatsApp led to violence there. However, Facebook sees tremendous growth opportunities in the country. India has 480 million Internet users, second only to China. According to Forrester Research Inc., this number is expected to grow to 737 million by 2022.
