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Facebook set to bet high on Libra crypto


Bengaluru | Mumbai: Social network Facebook is set to launch its own virtual currency- Libra- next year enabling users to transact through a digital wallet on WhatsApp and Facebook Messenger.

The American company has floated an independent subsidiary Calibra for its bitcoin business. Separately, it has formed a Libra association for the cryptocurrency with 27 members including MasterCard, PayU and Uber to ensure the virtual currency is accepted by merchants across the world.

“We aspire to make it easy for everyone to send and receive money just like you use our apps to instantly share messages and photos,” Facebook founder Mark Zuckerberg wrote in a post on the platform on Tuesday. Calibra will build services that lets users “send, spend and save Libra, starting with a digital wallet that will be available in WhatsApp and Messenger and as a standalone app next year,” he said.

In a whitepaper released on Tuesday, Facebook said Libra could be converted into local currencies and that it is engaging with policymakers and regulators to make this possible.

“We believe that collaborating and innovating with the financial sector, including regulators and experts across a variety of industries, is the only way to ensure that a sustainable, secure, and trusted framework underpins this new system,” the whitepaper stated.

As of now, it is unclear if the cryptocurrency will be launched in India next year. Last year, the Reserve Bank of India had banned dealing with virtual currencies using the banking network. However, peer to peer transactions of digital currencies is still allowed.

In May, media reports had said that Facebook could test its digital currency in India.

Facebook did not reply to ET’s queries on whether Libra will be launched in India in 2020.

India has the largest user base for WhatsApp with over 400 million people using the messaging platform on their smartphones, while Facebook has over 300 million users, according to Statista. The social network has 2.38 billion users, while WhatsApp has 1.3 billion users worldwide.

Blockchain and cryptocurrency experts in India say that while globally Libra is a major milestone for blockchain technology, the lack of regulations could stymie its progress in India.

The Facebook cryptocurrency project could also face a backlash from regulators globally, experts said.

“Facebook has taken the approach of making this a stablecoin but stablecoins have failed due to regulation in the past. The new instrument linked to (fiat) currencies might affect their movement and give reason to central banks to push back on it,” said Tanvi Ratna, a US-India Fellow of the New America Foundation and a blockchain policy researcher.

“For example, if 40% of the new Facebook Coin is linked to the US dollar and millions of transactions of the coin take place on the platform, it could affect the movement of the dollar, she said.

France has already called G-7 countries to regulate the Facebook cryptocurrency.

“However, if countries across the world change their regulatory framework around digital assets, it will impact the project,” said Anirudh Rastogi, managing partner at law firm Ikigai.

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Blockchain enthusiasts are also questioning whether Libra truly hews to the spirit of decentralized technology represented by crypto currencies worldwide. Facebook’s plan to comply with common regulatory requirements mandated by central banks like information about the user and usage of government backed securities, is in order to drive initial adoption of the cryptocurrency and the wallet according to Ramani Ramachandran, cofounder and CEO of ZPX, a Singapore-based blockchain startup.

“This is the opposite of true crypto. It is completely KYC-driven, regulated by local laws and influenced by anyone who wants to pay up to $10 million and be a validator node,” he said.

Others in the crypto currency sector fear the current regulatory framework could prove to be a dampener to Libra’s growth in India even as it gains traction worldwide.

“Indian users or developers can’t legally go from fiat (rupee) to the Libra stablecoin (or vice versa) via banked on-ramps,” said Nitin Sharma, founder of Incrypt Blockchain and an investor in the space.





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