Rumors about Facebook’s own cryptocurrency have circulated for some time, though the company has not officially commented. For the first time, Bloomberg reports on Facebook’s crypto project, suggesting it may take the form of a stablecoin and naming potential investors.
According to Bloomberg, venture capitalist Tim Draper will meet with Facebook Inc. to discuss possible investments in the social network’s cryptocurrency initiative (loosely translated):
I’m interested in hearing the story. We’ll see if it fits.
Facebook reportedly aims to raise up to $1 billion to launch its own digital asset. In addition to Draper, the company is scheduling meetings with other wealthy individuals who may also have the opportunity to invest. Tech journalist Nathaniel Popper of The New York Times first reported on the fundraising efforts, though no official confirmation has been issued.
Bloomberg further states that Facebook is working on a stablecoin pegged to the US dollar or another fiat currency to reduce extreme price volatility. The best-known stablecoin is Tether, which is also tied to the US dollar; however, questions remain about whether all circulating Tether tokens are fully backed by corresponding bank reserves. Facebook is said to plan enabling transfers within its messaging app WhatsApp, with India intended as the first pilot market to test the service before a wider rollout to other countries.
Facebook is still a long way from launching such a digital coin, Bloomberg reports, because key questions about securing the digital assets have not yet been resolved. If Facebook were to introduce a stablecoin for its apps—Facebook, WhatsApp and Instagram—about 2.7 billion users could gain access, potentially creating a massive user base quickly. It also remains unclear whether the stablecoin would use blockchain technology or another software solution.
Since hiring former PayPal president David Marcus to lead the messaging division, the public has anticipated progress in financial technology from Facebook. A blockchain team was established at Facebook last May and has steadily grown since, with new job openings posted recently. Why Facebook is seeking outside capital to fund the project is unclear, given the company’s substantial internal financial resources.
Featured Image: NicoElNino | Shutterstock