South East Asia has been a hotbed for Fintechs and at the forefront of global payment innovation. Superapps like WeChat, Grab, and Gojek have injected a healthy sum of money into the development of their in-app wallets, which are clear as daylight in showing the world just how essential an ecosystem enabler wallets will be. Many of our customers too have risen to show that there is a clear and strong need for integrated payments into app communities, particularly those with users that live across countries and jurisdictions.
So it is to no surprise that we have heard the buzz around a potential crypto-coin from Facebook. This one company alone has users across a number of their apps (Instagram, WhatsApp, Messenger too) that are in the lives of nearly a third of the world's population. So it would seem rather logical for them to want to impact these users financially. Now, this 'could' be a good thing, but in all likelihood, it will simply not come to pass.
There are a few rather glaring reasons for this. Where should we start? Perhaps with the fact that they have thought to circumvent all financial regulations and autonomy by creating a crypto-coin. The mere fact that established tokens like Bitcoin are still awaiting the real stamp of approval (also spelt: SEC), what could possible make any gambling man consider that Facebook has a real shot at convincing regulators globally to allow them control of financial data and be the rails for billions of people? Keep in mind, most regulators, even those in the US, are actively hunting down ways to limit Facebook's influence, including breaking the company up into parts.
According to this New York Times Article, Facebook intends to connect with a number of crypto exchanges, and also base their stable coin on a pool of Fiat currencies. The idea Facebook seems to have, is that because they have a large volume of users, that somehow they would be able to simply build out their own 'money' and become the payment method of choice for billions (imagine what monetary authorities feel about a new global currency).
But nothing can be farther from the truth . New payment technologies need to overcome the muscle memory people inherently have in the way they choose to spend money. Facebook, by creating what looks a lot like just another walled-garden in payments, will have a mighty task trying to earn the trust of people with their money, while they already seem to be laser focused on losing the trust of people with their personal data.
More recently, Coindesk announced that Facebook is said to be seeking $1 Billion in funding to develop their coin, with a potential upside of $3-$19 Billion in additional revenue by 2021. As fascinating as the theoretical concept of a widely accepted cryptocurrency is to anyone in Fintech, the fact is, it is highly unlikely to be Facebook that gets the first nod; and furthermore, it would actually be far more enriching to their ecosystem to enable true cross-border transfers between their billions of users in Fiat currencies. Facebook is a success because it has enabled itself to being the common denominator between the old and young, rich and poor, male and female. They would tread well to keep to that winning formula by enable the common denominators of money... Dollars, Euros, Yens, and so on.