Facebook is unveiling its cryptocurrency later this month, according to tech media outlet The Information.
Targeting emerging markets and developing countries initially, the digital token is said to be designed as a “borderless currency”, which users can transfer across borders without transaction fees.
Previous reports suggested Facebook’s cryptocurrency payments plan features a “stablecoin” for money transfers over its WhatsApp messaging service, with the digital token underpinned by blockchain technology and pegged to the US dollar. And users will be able to store, trade, and exchange it for regular currency.
Unlike other cryptocurrencies, stablecoin is pegged to real-world assets with set prices – such as other currencies, oil, etc. – to help combat price volatility.
According to the latest report by The Information, Facebook’s cryptocurrency will be “aggressively marketed in developing nations, where government-backed currencies are more volatile”.
The digital money will be integrated as a payment tool on its ecosystem including WhatsApp, Messenger, and Instagram. Facebook plans to partner with merchants to accept it for payment.
The social media giant is also planning physical ATM-like machines where users can buy the currency.
Meanwhile, Facebook reportedly plans to cede control of its forthcoming cryptocurrency to outside backers as part of efforts to promote trust in the newly launched digital payment system and reassure financial regulators.
An independent foundation will be set up, which will help govern the digital currency and contribute capital.
Citing sources familiar with the plan, The Information said Facebook has courted dozens of financial institutions as well as other tech companies to join the foundation.
Facebook is soliciting third-party organizations to help manage the cryptocurrency, by acting as “nodes”, which contain the computing power necessary to validate transactions by resolving complicated mathematical equations.
They will purportedly pay as much as US$10 million for the privilege to act as a node on the payment network for Facebook’s cryptocurrency, the report said.
Facebook hopes to launch its network with 100 nodes, generating US$1 billion in licensing fees. The funding received will be turned into a basket of fiat currencies and low-risk securities from different countries, and would serve as collateral to back the stablecoin associated with the payments network.
With the announcement of its cryptocurrency later this month, Facebook will allow employees working on the project to take their salary in the form of the new currency, The Information added.
Earlier this week, the Financial Times reported that the United States Commodity Futures Trading Commission is in talks with Facebook about its upcoming stablecoin.