Facebook yesterday released further details about its highly touted cryptocurrency. Dubbed GlobalCoin, this is the trojan horse that will bring blockchain adoption to the masses, according to José Maria Macedo, Head of Advisory at blockchain advisory firm, AmaZix.
Facebook’s 2.4 billion monthly users will be able to change dollars and other international currencies into digital coins, which could then be used to make payments or transfer money without needing a bank account.
Facebook is looking to set this up in about a dozen countries by the first quarter of 2020. And the social media giant wants to start testing GlobalCoin, the value of which would be pegged to a basket of established currencies, including the US dollar, the euro and the Japanese yen, by the end of this year.
Founder Mark Zuckerberg has spoken to Bank of England Governor Mark Carney regarding the opportunities and risks involved in launching a cryptocurrency. His company has also sought advice on operational and regulatory issues from officials at the US Treasury.
‘Bigger than the US dollar’
“Through Facebook and Whatsapp, potentially hundreds of millions of people will use GlobalCoin. It has the potential to be bigger than the US dollar in terms of numbers of users,” Macedo argues.
“Mark Zuckerberg has looked beyond the hype, and seen the potential of cryptocurrencies for low-cost, reliable cross-border transfer of payments. Startups are set to transform industries from banking to the supply chain. Companies large and small, like Facebook, are looking at how blockchain can help their business in this new digital era, and we are just at the start of the journey of this fledgling industry,” he adds.
Oliver Woodhouse, a financial services regulatory lawyer at Capital Law, agrees that this is an opportunity to introduce billions of people to innovative and emerging technology that has the potential to revolutionise the payment and remittance market; particularly in “unbanked” areas of the world, where individuals may not be able to open a bank account, but otherwise have internet access and a social media account.
So what does this mean from a regulatory perspective? The cryptoasset space is a fluid area that is continually developing, both in the UK and globally. The mere existence of GlobalCoin demonstrates this perfectly. In the UK, the FCA, HM Treasury and the Bank of England are all consulting on regulatory treatment of cryptoassets, and exploring whether legislative change is necessary.
“Effectively this may bring a broader range of cryptoassets into the regulated space (so beyond those which have characteristics of existing regulatory financial instruments); however, players in the sector consider that regulatory decisions have been slow to develop in many jurisdictions,” Woodhouse says.
“But the potential opportunities afforded by the 2020 launch of GlobalCoin to expose billions to the sector should, hopefully, further encourage regulators and legislators globally to provide clarity on treatment of the new asset class at a faster pace.”
This also demonstrates that global technology businesses are continuing to take marked steps into the world of financial services, he adds. “How this will be treated from a regulatory perspective is one thing, what effect this will have on more traditional financial service providers, who may already be suffering as existing customers move to more innovative providers, is quite another.”