According to a report published by Financial Times on 2 June, Facebook, the social media giant which boasts 2.38 billion users a month, has initiated talks with US derivatives regulators, involving its plan to launch a digital currency.
Earlier this year in February, rumors inundated the internet that Facebook planned to create a sort of umbrella system for WhatsApp, Facebook Messenger, and Instagram, powering it with a cryptocurrency. It was expected that Facebook’s cryptocurrency stablecoin would have exposure to 2.9 billion people or more. Further rumors held that by February, Facebook had already approached various cryptocurrency exchanges with its stablecoin.
The Present Scenario
The stablecoin– a cryptocurrency whose value is matched to that of a fiat currency– that Facebook plans to launch is called GlobalCoin reportedly.
Christopher Giancarlo, head of the Commodity Futures Trading Commission, has said that the commission is yet in a very early stage of conversation with Facebook and that this talk aimed to find out if Facebook’s stable coin would fall under the regulatory authority of CFTC.
Mr. Giancarlo further commented that they were very interested in understanding Facebook’s plan better and that they could ‘only act on application, not having anything in front of them.’ However, he maintained that it was still too early to say if GlobalCoin would be traded via futures or cash-based markets, which would be decisive of its falling in or out of CFTC’s remit.
‘A Clever Solution’
Mr. Giancarlo called Facebook’s solution ‘very clever’; adding that nonetheless, it would involve few ‘basic risks’ which implies a situation when the price of an underlying instrument and its derivative do not sync perfectly. Facebook’s solution has gained noticeable momentum in the first half of 2019. Earlier this year in April it was reported that Tim Draper, Venture capitalist and founder of Draper Associates, met Facebook to discuss its stablecoin.