Tech Brief: Facebook to Launch its Libra Cryptocurrency in 2020

Facebook has formally announced its blockchain-based "cryptocurrency" Libra and a global association of 28 organisations (called Libra Association) that will govern it. It is set to launch next year. And Facebook also announced Calibra, a new subsidiary that will build a digital crypto-wallet for Messenger, WhatsApp, and a standalone app on iOS and Android. When the wallet app becomes available for launch, users will be expected to provide a government-issued ID to sign up for an account*. By inserting itself as a middleman and leveraging increased adoption of internet across the world (after its controversial Internet.org initiative), the social network hopes to bring an array of financial services to people who do not have access to bank accounts. While Facebook's fintech ambitions to make its payments platform a ubiquitous global standard are lofty, it may face obstacles in its largest market India, which is expected to ban cryptocurrency trading.

* From Calibra's privacy policy: "Calibra will not share account information or financial data with Facebook, Inc. or any third party without customer consent. For example, Calibra customers' account information and financial data will not be used to improve ad targeting on the Facebook, Inc. family of products. Calibra will use aggregated Facebook, Inc. data that is not linked to your Calibra account to improve the Calibra product. For example, we may use Facebook, Inc. data to see which regions have broader internet adoption."

Update on Jun. 19: TechCrunch is reporting that Calibra will indeed not launch in India (alongside China, North Korea, and Iran), following government proposals that would impose a 10-year jail sentence on those who "mine, hold, sell, transfer, dispose, issue, or deal in cryptocurrencies." WhatsApp already offers a peer-to-peer payments service called WhatsApp Pay in the country, the only market where the messaging service offers its payment service. But Calibra is meant to be available on WhatsApp, Messenger, and as a standalone app. With Facebook was already facing significant backlash over mishandling user data and not doing enough to prevent Russian interference in the 2016 U.S. presidential election, the social network's new fintech initiative is likely to encounter more privacy and regulatory hurdles along the way.

Update on Jun. 25: The New York Times is reporting that executives at seven of Facebook's Libra partners — including Visa, Mastercard, and Uber — say the companies have only signed nonbinding agreements and have not yet paid to join the Libra Association.

Update on Aug. 5: Facebook's Libra digital currency faces further scrutiny, as the social network acknowledges the pushback from lawmakers and regulators may lead the service to be not available in a timely manner, or at all; data officers from the U.K., European Union, U.S., Canada, Burkina Faso, and Australia issue a joint statement, noting that "while Facebook and Calibra have made broad public statements about privacy, they have failed to specifically address the information handling practices that will be in place to secure and protect personal information."