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 people familiar with the matter.
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.
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.
The past year has seen a boom in crypto projects related to stablecoins. At one point, there were more than 120 ventures related to this theme, according to Stable. The report, a website that tracks stable tokens. The concept was created to create a digital coin that would be far easier to use on daily purchases because it would be more stable than currencies like Bitcoin.
The idea has proven tough to carry out in real life, with at least one high-profile project shuttered in recent weeks. A stablecoin was known as Basis recently closed after eight months. The Hoboken, New Jersey-based company said there was no apparent way around being classified as security as opposed to a currency, which could significantly reduce the number of potential buyers. The swift collapse came after Basis drew well-known backers like Andreessen Horowitz and Kevin Warsh, a former governor of the U.S. Federal Reserve.
Perhaps the most high-profile stablecoin to date, Tether, has also been surrounded by controversy. While Tether’s creators say each of its tokens is backed by one U.S. dollar, the company’s refusal to be audited has raised questions about whether that’s the case.