Facebook Inc. has signed up more than a dozen companies including Visa Inc., Mastercard Inc., PayPal Holdings Inc. and Uber Technologies Inc. to back the new cryptocurrency that the social-media giant plans to unveil next week.
The collection of financial firms and e-commerce companies will invest around $10 million each in a consortium that will govern the digital coin, according to people familiar with the matter. The money would be used to fund the creation of the coin, which will be pegged to a basket of government-issued currencies to avoid the wild swings that have dogged other cryptocurrencies, they said.
The Wall Street Journal reported last month that Facebook was recruiting financial firms Opens a New Window. and online merchants to help launch the crypto-based payments system and was seeking to raise around $1 billion for the effort, code-named Project Libra. The secretive project, in the works for more than a year, revolves around a digital coin that its users could send to each other and use to make purchases both on Facebook and across the internet.
Talks with some of the partners are ongoing, and the group’s eventual membership may change, the people added.
A Facebook spokeswoman declined to comment.
It has been a decade since bitcoin was born, yet consumers hardly use it or the hundreds of other cryptocurrencies to pay for things. Facebook is betting it can change that with a crypto-based payments system built around its giant social network and its billions of users.
It is still not entirely clear, even to some members of the consortium, how the coin will work or what their roles will be, people familiar with the project said. Regulatory hurdles in the U.S. and elsewhere are high.
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Some members have expressed concerns that the token could be used to launder money and finance terrorist organizations, some of people said, a persistent problem with bitcoin and other cryptocurrencies.
Facebook won’t directly control the coin, nor will the individual members of the consortium known as the Libra Association. Some of the members could serve as “nodes” along the system that verifies transactions and maintains records of them, creating a brand-new payments network, according to people familiar with the setup.