Facebook Cryptocurrency Gets Backing From Major Players

Mastercard, PayPal Holdings, Uber Technologies and Visa are among the more than a dozen companies that have agreed to back Facebook’s new cryptocurrency, codenamed Project Libra. Each company will invest $10 million and be part of the Libra Association, a consortium to control the virtual currency, said sources. The invested money will fund the currency, which will be linked to a collection of government-issued currencies to make it more stable. Facebook has been developing the project in secrecy for over a year.

The Wall Street Journal reports sources added that, “talks with some of the partners are ongoing, and the group’s eventual membership may change.” Although bitcoin first appeared ten years ago, consumers haven’t adopted it. Facebook hopes to change that with a “crypto-based payments system built around its giant social network and its billions of users.”

But it’s still not clear how the coin will function or the regulatory efforts it might face. The Libra Association members also don’t know their exact roles yet, although “some of the members could serve as ‘nodes’ along the system that verifies transactions and maintains records of them, creating a brand-new payments network.”

Additional companies that have joined the Libra Project are “financial-technology firm Stripe, travel-reservation site Booking.com and Argentina-based e-commerce site MercadoLibre.” With the Libra Association, Facebook will be able to create some separation between the currency and its platform, while it “could exert considerable influence over it.”

The companies that have signed on to the platform were no doubt influenced by “the lure of Facebook’s nearly 2.4 billion monthly active users.” For credit card companies, participating in Libra “allows them to closely monitor Facebook’s payment ambitions while sharing in the upside should the project gain traction with consumers.”

Sources said that Facebook is slated to release a white paper to “introduce the coin next week,” which may be co-signed by some Libra Association members. Last month, WSJ reported that “Facebook was recruiting financial firms and online merchants to help launch the crypto-based payments system and was seeking to raise around $1 billion for the effort.”