6 Significant Impacts May Brought by Facebook’s GlobalCoin Crypto
Facebook is announcing its cryptocurrency later this month, the social media company is gearing up to announce its much-hyped cryptocurrency this month, but very little is still known about the project, known internally as Project Libra.
Facebook’s cryptocurrency is a stablecoin, pegged to the value of a basket of global currencies. To keep it stable, GlobalCoin will be backed by millions in fiat currency. That money will be held somewhere – probably the Federal Reserve – generating interest. Facebook also plans to apply its GlobalCoin to cross-border payments and negotiate with Visa and MasterCard. The name “Global Coin” embodies Facebook’s ambition to the global market.
As a social media giant, facebook covers ¼ netizen population. There is no doubt that the crypto issued by facebook may leave a significant impact on global market.
Crypto will become a powerful force in developing countries.
Central banks in developing countries mostly lack improved rules and have difficulty in maintaining the value of its legal currency, easily losing its purchasing power. By providing citizens in developing countries with more reliable reserves than their government-backed currencies., Facebook’s crypto will indirectly promote effective fiscal and monetary discipline in developing countries, which will definitely improve the life for those people.
Facebook cryptocurrency might pay interest
Facebook will park the reserves at the Federal Reserve via its financial partners. The Federal Reserve pays 2.35 percent according to its interest on excess reserves rate (IOER). There would be uproar if Zuckerberg didn’t disclaim this and share it with users. But it could trigger a riot to expose the welfare scale of the core banks in the U.S. banking system.
Facebook Fund will gain large influence in the global capital market
Facebook plans to turn over control and governance of crypto projects to an independent found recently established in Switzerland. It does help to reduce the centralization of Facebook’s crypto. Given that the Facebook Fund is playing a part of the central bank’s role, it may soon have a huge impact on global capital markets. The Facebook Fund will define the weight of the legal currency linked to its crypto as the central bank, keeping its assets to balanced.
Many outdated financial regulatory policies will be exposed
Will the crypto users face the problem of buying coffee and through an American bank account? Will it get benefits from regulators that start-ups don’t have if facebook’s crypto project will bring tax revenue to the government,? Those problem occurs in regulation the will expose outdated financial regulatory policies.
Facebook cryptocurrency’s regulatory report will spark controversy
We may soon know the number of real-name users among Facebook’s 2.3 billion users, for users using Facebook’s crypto are required to prove their identity and pass KYC authentication. Facebook is expected to provide more rigorous authentication and fraud detection than other crypto projects. Facebook’s regulatory report will trigger discussions on data privacy, financial privacy, overseas asset reporting, tax compliance ,and reporting burden, or the extraterritorial reporting requirements on non-U.S. companies imposed by the U.S. government. Governments around the world will treat Facebook’s crypto as a source of consumer data, including all privacy data and related tax reports.
Facebook cryptocurrency will benefit bitcoin
Facebook will greatly accelerate the pace of teaching people about cryptocurrencies. And when this happens, more people will turn to bitcoin for one simple reason—Bitcoin is scarce, while Facebook’s cryptocurrency is not. Bitcoin is the most honest ledger for storing wealth. People will recognize that and shun derivatives of the existing financial system like GlobalCoin.
Zuckerberg and co. remain tight-lipped about GlobalCoin. The company has been aggressively meeting with regulators and made attempts to decentralize the mechanism by which it works. But it remains to be seen whether Facebook users will welcome Zuckerberg’s attempt to co-opt the crypto movement.