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Facebook confirms new crypto debut in 2020

Facebook confirms new crypto debut in 2020

Mubasher: Facebook unveiled plans for its new global cryptocurrency, to be released next year, with conventional banks currently sitting on the sidelines, and regulators following a hesitant approach to digital assets, the Financial Times (FT) reported.

The social media giant started on Tuesday to promote for using the new currency, called Libra, as a means of payment and as a safe store of value.

Libra, backed by a range of currencies and assets stored worldwide, will not have a fixed exchange rate against any traditional peer.

Nevertheless, it will not be vulnerable to extreme swings as the case for cryptocurrencies such as the ten-year-old bitcoin.

Until now, 28 groups, including payments firms, e-commerce companies and venture capital funds stated that they will support the new crypto and integrate it into their services.

Facebook hopes that the number of companies signing up to reach 100 before the debut of the currency.

Apple, Google, Amazon and Microsoft have not jumped on the bandwagon yet, while banks decided not to join, citing uncertainties surrounding regulation and logistical concerns, the FT said, citing several industry sources.

Last month, reports said that Facebook was preparing to launch the digital currency, enabling its 2.4 billion monthly users to exchange dollars and other conventional currencies into its crypto.

Facebook’s new digital currency marked an attempt to bring blockchain technology into the mainstream.

“We believe that people will increasingly trust decentralised forms of governance,” Facebook’s statement was quoted by the FT.

That said, it remained unclear whether Facebook’s currency will win the approval of regulators such as the US Securities and Exchange Commission (SEC) and be adopted or resisted by financial service industry.

Central banks already held the impact of company-created digital currencies on financial stability.

“We see hurdles to scale, we see hurdles to adoption, we see enough of this to decide that we would not participate in a scheme like this,” the FT quoted a top payments executive at a global bank as saying.

The US company could also find it difficult to explain the intricacies of the cryptocurrency to consumers and merchants, which would represent a big regulatory challenge, he added.