Social media platform Facebook has unveiled further details of its much-anticipated digital currency offering, which it hopes will transform financial services.
Named Libra, the cryptocurrency will enable Facebook's 2.4 billion users to make international transactions and is expected to go live in early 2020. In addition to the cryptocurrency, Facebook has launched Calibra, a separate subsidiary to manage the payments network.
The first product to be developed through Calibra will be a digital wallet service that will be available as a standalone app or accessible through the Facebook, Whatsapp and Messenger platforms. Facebook users will be able to send money to other individuals around the globe as well as pay for goods, services and public transport using Facebook's cryptocurrency rather than their own local currency.
It will also allow Facebook to manage the payments internally rather than relying on payment processing partners as it has done in the past.
In addition to describing how the service will work, Facebook has also revealed more details about the backers of the new global digital currency. these incopude payments proviiders Visa, Mastercard, Paypal, PayU and Stripe; e-commerce companies eBay, Booking Holdings, Farfetch, Lyft, Mercado Pago, Spotify and Uber; telecoms companies Iliad and Vodafone; blockchain services Anchorage, Bison Trails, Coinbase and Xapo Holdings and a number of venture capital firms and NGOs.
Notable absentees from the roster of backers include Google, Amazon and Apple and incumbent banks which are reportedly concerned about logistics and regulation.
While Libra could be a game-changer for traditional payments providers as well as a welcome source of revenue for Facebook, it could face a number of regulatory challenges. Facebook has come under greater scrutiny in the last year following a number of revelations about its treatment of users' data and concerns about privacy.
In addition to competition and privacy concerns, regulators will also be concerned about Facebook's wish to enable its cryptociurrency to be converted into other currencies, raising the prospect of increased money laundering.
Facebook has attempted to address some of these concerns by stating that any data collected by Calibra will not be shared with Facebook or any other thrid party or used as the basis for target advertising without users' consent.
Facebook has also said that account holders will face the same know your customer requirements as with mainstream banking accounts and that it will deploy computer programs and algorithms to detect any suspicious transactions.
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