Recently, there have been rumors circulating in the crypto market regarding the potential release of a stablecoin by Facebook. So far, there have not been any official announcements from the social media giant. However, a recent report by Bloomberg gives strong indications that it will happen in the future.
Although this crypto – which will target WhatsApp users in India – could encourage adoption, it’s unclear how the mainstream market will react. Other social media giants might wait to see how the stablecoin performs before creating their own alternatives.
Facebook to launch a cryptocurrency
Rumor has it that the social media company plans to create and release its own stablecoin for the Indian remittances market. Pegged to the U.S. dollar, the crypto would act as a medium for payment within the WhatsApp platform. Facebook would peg the token with the USD to avoid high price fluctuations in the crypto market.
In what seems like excellent planning, the company hired former PayPal president David Marcus in 2014. His main responsibility was to lead WhatsApp’s business subsidiary. Many expected Marcus to bring the company closer to the financial industry, which this stablecoin may achieve. However, the release still appears to be some way off, with more planning to come.
Facebook has been stocking up its blockchain department, employing 40 professionals so far. An anonymous spokesman said “like many other companies, Facebook is exploring ways to leverage the power of blockchain technology.”
With over 200 million users in India, WhatsApp could reach a large market with its token. Apart from easier payments, the token would also act as a remittance method for money transfers. The fact that Indian citizens working abroad sent home $69 billion in 2017 suggests that WhatsApp crypto payments could have huge potential.
Facebook’s history with crypto
Interestingly, rumors surrounding Facebook’s own cryptocurrency have been around for half a year. Back in May 2018, Cheddar reported that Facebook was considering launching its own cryptocurrency. Although the source remained anonymous, it now seems those plans did indeed exist. The biggest difference was that the original report said Messenger users would be the target audience.
On the flipside, Facebook has a history of banning crypto ads. On January 30, the platform made an announcement banning all promotions regarding ICOs and crypto trading. The main reason for the decision was to protect against fraudulent crypto projects, as Facebook said:
We want people to continue to discover and learn about new products and services through Facebook ads without fear of scams or deception.
Facebook later relaxed its policy, easing sanctions on crypto advertisements on June 26. Now, the platform allows pre-approved ads to go live. Only genuine businesses can freely advertise their products and services, provided they deliver all necessary proofs.
Could other social media companies follow suit?
So far, Facebook’s announcements have done little to propel blockchain adoption within mainstream markets. WhatsApp’s stablecoin plans are not the first of their kind in the industry, although they’re definitely the biggest. Others include LINE Corp’s LINK token, Telegram’s controversial TON, and Kik, which launched its Kin token through a $100 million ICO in 2017.
Telegram serves as a reminder of how token creation can have complex issues, especially due to regulatory restrictions. According to the Wall Street Journal, the company canceled its planned TON ICO fundraiser in May 2018. The main reason seemed to be a conflict of interest, as Telegram had already raised the necessary funds. With $1.7 billion collected from fewer than 200 investors, it seems possible that the SEC’s crackdown pushed the crowdsale out of the market.
Other large social media platforms, including YouTube and Twitter, are yet to announce any crypto strategies. Since Facebook’s plans are not yet public, it seems its competitors are waiting before they make a move. Of course, Facebook’s foray into crypto could still be problematic. That’s why we can expect rival companies to wait it out, so as to avoid a messy situation like Telegram’s.