Reports about Facebook getting into cryptocurrencies have been doing the rounds since January, but looks like the social media giant may finally be making the move. A new Bloomberg report has revealed that Facebook is developing a cryptocurrency for Whatsapp transfers, and its first focus will be the remittance market in India. The purported cryptocurrency will be a stablecoin that will be pegged to the US dollar.
However, even if these reports are true, it may be a long time till such a plan becomes a reality. Facebook is still working on the technology, and figuring out plans for custody and reserve currencies to protect the value of the stablecoin.
Notably, Facebook had moved David Marcus from its messenger division to lead the company’s blockchain initiatives. The company has also hired close to 40 people for its blockchain division.
Facebook Stable Coin for India Remittance Market?
While it is good to know that Facebook wants to disrupt the Indian remittance market which is a huge opportunity, we see the following roadblocks for the company’s new stablecoin:
1. India’s Regulatory Mess – India has been dilly-dallying on cryptocurrencies, and latest reports indicate that the government panel set up to study virtual currencies has recommended a ban. Many notable financial experts in India have also advocated a ban. With India having such a negative attitude towards cryptocurrencies, we wonder whether the government will really allow such a stablecoin in India.
2. Presence of Local Competitors – Facebook will have to contend with other established payments giants like Paytm and government’s own UPI platforms. Will people give up these platforms and adopt a new stablecoin from Whatsapp? That remains to be seen.
3. Facebook’s History with India – Mark Zuckerberg may enjoy a good relationship with India’s Prime Minister Narendra Modi, but Facebook’s ‘Free Basics’ initiative to provide free data was met with a lot of protest since it was seen as a threat to net neutrality. Facebook had to roll back its plans after the public outcry. With such a history behind it, will the people of India trust Facebook’s stable coin?
We do hope that Facebook has actually communicated its plans about the stablecoin to the Indian government. Considering India’s ambiguous stance around cryptocurrencies, Facebook’s purported dream can become a reality only if the Indian regulators are on board!