Cryptocurrencies may be banned in India and going through a regulatory crisis here, but they continue to incite debate and spur innovation to beat existing policy. Now working on a cryptocurrency that can be used on WhatsApp is Facebook.
A Bloomberg report quoted internal sources saying that the company is building a cryptocurrency pegged to the US dollar to minimise volatility. Facebook is reportedly testing this out internally and will be working on a plan to release these crypto coins based on currencies in the markets that it operates in.
This move is seen as a big one because Facebook had hired former Pay Pal executive David Marcus in 2014 to build a financial services platform. Marcus leads the company’s blockchain technology initiatives and has been hiring scores of people for its crypto work.
In a statement, Facebook only said:
"Like many other companies, Facebook is exploring ways to leverage the power of blockchain technology, a new small team is exploring many different applications. We don’t have anything further to share."
WhatsApp has over 200 million users in India and this crypto-based application could prove to be big in the country. According to the World Bank, total overseas remittances by Indians working abroad into the country stood at $69 billion in 2017. The coin that Facebook is working on is called a stable coin which, unlike a Bitcoin or Ethereum, is pegged to a currency.
Several startups have tried to build these stable coins but have shut down. Recently, a stablecoin known as Basis closed down even with backers like Valley-based VCs Andreessen Horowitz and former member of the US Federal Reserve Board of Governors Kevin Warsh, the Bloomberg report said. The industry continues to be mired in controversy as startups in the crypto world do not want to be audited by governments.
The more interesting aspect was that the Indian government clamped down on several crypto-trading startups and passed a regulation banning these startups from operating through banks to transfer money. However, ‘stablecoins’ could actually become a medium of digital exchange.
Sources told YourStory that if a cryptocurrency is linked to regular currency then it is not a cryptocurrency at all. And that could be the loophole that works in Facebook’s favour.
India has over 480 million internet users, second only to China. That number is projected to grow to 737 million by 2022, according to Forrester Research Inc. Facebook may just make this work in India, especially given its tie-up with Reliance Industries to launch WhatsApp on Jio feature phones.