But the social network faces tight regulatory scrutiny over its poor track record on protecting users’ personal data
Facebook has disclosed the first details of its planned cryptocurrency scheme, which it said it hopes to launch by early next year.
The company said it wants to begin testing the virtual currency, referred to internally as GlobalCoin, by the end of 2019. It said it would release more details this summer.
Facebook has met with the US Treasury and the Bank of England to discuss the opportunities and risks of the project, which would seek to leverage the social network’s massive base of 2.4 billion monthly users around the world.
London School of Economics researcher Garrick Hileman told the BBC he estimated that, conservatively, only around 30 million people use cryptocurrencies today.
Facebook has also discussed the plans with payment providers such as Western Union, Visa and MasterCard.
Facebook chief executive Mark Zuckerberg has also reportedly met with Cameron and Tyler Winklevoss to discuss the plans, brothers who attended Harvard with Zuckerberg and later sued him for allegedly stealing their idea for the social network.
The twins founded the Gemini cryptocurrency exchange in 2014, one of the first two companies to win regulatory approval to launch a digital currency pegged to the value of the US dollar, the Gemini dollar.
Facebook said it believes its Project Libra can compete with banks to overturn existing systems by offering users lower costs.
It would team up with banks and brokers to allow users to exchange dollars and other currencies for the virtual coins.
It has discussed plans with online merchants to allow users to purchase items with the currency in exchange for lowering transaction fees.
Project Libra is set to be formally launched in the form of a Switzerland-based association in the coming weeks.
The plans were first reported last December.
“Payments is one of the areas where we have an opportunity to make it a lot easier,” Zuckerberg said at the firm’s developer conference last month.
“I believe it should be as easy to send money to someone as it is to send a photo.”
Facebook is believed to be looking to peg the asset’s value to a handful of established currencies, such as the US dollar, the euro and the Japanese yen, in order to avoid the wild fluctuations that typically affect other cryptocurrencies, such as Bitcoin.
The company’s plans could see it paying users in fractions of the coin for activities such as viewing ads or interacting with online shopping content.
But the plans are likely to face intense scrutiny, due to Facebook’s poor track record of handling users’ sensitive data.
“Facebook has… had issues with protecting user data in the past few years and this may well be an issue for it as it tries to provide guarantees to users that their financial information is safe,” Rebecca Harding, chief executive of banking trade data analytics firm Coriolis Technologies, told the Guardian.
Earlier this month the US Senate banking committee wrote an open letter to Zuckerberg asking how the proposed currency would work, what consumer protections would be offered and how Facebook planned to secure the relevant data.
In 2009 Facebook launched a micropayments system called Facebook Credits, but by 2014 had effectively phased out the system after it failed to gain traction.
In 2014 it was reported that the firm was negotiating with Irish regulators to become a licenced provider of financial services, enabling it to store funds on behalf of users, facilitate payments to other businesses and issue its own currency.