Facebook plans to develop its own stablecoin for remittances

Facebook Inc. is working on making a cryptocurrency that will let users transfer money on its WhatsApp messaging app, focusing first on the remittances market in India, according to Bloomberg.

The company is developing a stablecoin – a type of digital currency pegged to the U.S. dollar – to minimize volatility, said the people, who asked not to be identified discussing internal plans. Facebook is far from releasing the coin, because it’s still working on the strategy, including a plan for custody assets, or regular currencies that would be held to protect the value of the stablecoin, the people said.

Facebook has long been expected to make a move in financial services, after hiring former PayPal president David Marcus to run its Messenger app in 2014. In May, Marcus became the head of the company’s blockchain initiatives, which haven’t been discussed publicly in detail. Facebook has been on a hiring spree, and now has about 40 people in its blockchain group, according to employee titles on LinkedIn.

„Like many other companies, Facebook is exploring ways to leverage the power of blockchain technology,” a company spokesman said in a statement. „This new small team is exploring many different applications. We don’t have anything further to share.”

WhatsApp, the company’s encrypted mobile-messaging app, is popular in India, with more than 200 million users. The country also leads the world in remittances – people sent $69 billion home to India in 2017, the World Bank said this year.

Facebook, which has 2.5 billion global users, more than $40 billion in annual revenue and greater experience navigating regulatory issues, may have a better chance of making a stablecoin that sticks. It would be the first large technology company to launch such a project. The company’s relationship with India has been fraught, mainly because some instances of fake news spread through WhatsApp have led to violence there. Still, Facebook sees tremendous growth opportunity in the country. India has 480 million internet users, second only to China. That number is projected to grow to 737 million by 2022, according to Forrester Research Inc.