Facebook unveils plans for new cryptocurrency

Facebook unveils plans for new cryptocurrency
© The Hill photo illustration

Facebook on Tuesday announced its plans to create a new cryptocurrency called Libra, saying it hopes to make transferring money as easy as sending a text message. 

A new subsidiary of the social media giant, Calibra, rolled out the alternative financial system with a website and white paper in an effort to get the cryptocurrency up and running by 2020.

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"Libra’s mission is to enable a simple global currency and financial infrastructure that empowers billions of people," the white paper reads. 

The new digital-native financial system is certain to draw scrutiny from lawmakers and regulators who have been criticizing Facebook over its handling of data privacy and potential antitrust issues.

But executives are assuring reporters that none of the financial customer data collected by Calibra will be shared with any other Facebook subsidiary.

“Your social data on Facebook is kept separate from Calibra data,” Kevin Weil, Calibra’s vice president of product, said, according to The Washington Post. “This is not about improving ad targeting. We’re trying to draw a bright red line.”

Financial regulators have showed increasing interest in regulating cryptocurrencies, saying they leave the door open to large-scale fraud and potentially criminal transactions.  

Libra's blockchain technology will allow users to hold addresses that are not linked to their real-world identity. The cryptocurrency will also be backed by government currencies like the dollar to make it more "stable" than other cryptocurrencies like Bitcoin.  

The effort will be led by the Libra Association, a nonprofit in Switzerland that will operate separately from Facebook. Facebook will be one of dozens of companies with voting power in the project.

As of Tuesday, Libra is backed by 28 diverse companies including Uber, Mastercard, Spotify, Vodafone, Coinbase and Women's World Banking. Each of the partners are expected to invest at least $10 million in the cryptocurrency. 

Libra will be available in Facebook's messaging services, Messenger and WhatsApp, as well as a separate app. 

Facebook said it will keep users' data safe using strategies similar to those used by banks.