Facebook's cryptocurrency gets backers including Mastercard, PayPal, Uber and Visa

The money will fund the creation of the coin, which will be pegged to a basket of government-issued currencies

Facebook Inc has enlisted more than a dozen companies including Visa Inc, Mastercard Inc, PayPal Holdings Inc and Uber Technologies Inc to back its new cryptocurrency, the Wall Street Journal reported on Thursday.

Facebook. Reuters

Facebook. Reuters

Each company will invest around $10 million in a consortium that will govern the cryptocurrency, the WSJ reported, citing people familiar with the matter.

The money will fund the creation of the coin, which will be pegged to a basket of government-issued currencies, the report said.

Facebook, Mastercard, Paypal, Visa and Uber did not immediately respond to requests for comment.

The social media giant's plans of launching its own cryptocurrency came out from a BBC report last month. Named as 'Globalcoin' the company could start testing it by the end of this year.

Facebook plans to launch a digital payments system using cryptocurrency in a dozen countries by the first quarter of 2020. The intention of launching this service is to provide users with an affordable and secure payments system for the ones who don’t have a bank account.

In order to discuss the potential risks and opportunities about the digital currency, Facebook CEO Mark Zuckerberg met with the Bank of England’s governor, Mark Carney. The BBC report also states that the company has taken advice from the US treasury for operational and regulatory issues.

India is rumoured to be a target for Facebook in this project. However, a recent draft called 'Banning of Cryptocurrency and Regulation of Official Digital Currency Bill 2019,' was announced by a panel headed by Economic Affairs secretary, Subhash Chandra Garg that reportedly proposed a 10-year-long prison term for anyone who "mine, generate, hold, sell, transfer, dispose, issue or deal in cryptocurrencies." Currently, there aren’t any regulations defined around the use of cryptocurrency in the country.

Facebook is also reported to have been in talks with Western Union to explore ways of making transactions faster and cheaper. Just like any cryptocurrency, Facebook will have to deal with the fluctuations in its value which could be a big barrier, according to blockchain expert David Gerrard.

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