Facebook has signed up Mastercard and Visa to back its Crypto project

Facebook’s crypto ambitions are continuing apace, with the company signing up over a dozen companies to back its crypto plans.Visa, Mastercard, PayPal, and Uber are among the major players that will invest $10 million each as members of the Libra Association a consortium that will govern Facebook’s crypto. Others include Stripe, travel reservation platform¬†Booking.com¬†and Argentina-based e-commerce company Mercado Libre, according to The WSJ citing people familiar with the matter.

However, the final look of the consortium in terms of membership could change as talks with some partners remain ongoing.Facebook plans to announce the project this week, ahead of a 2020 rollout, according to the outlet. As part of the announcement, the social media giant will release a white paper introducing the coin and has asked the Libra Association members to cosign it.This means that the stature of the players that have bought into Facebook’s crypto vision is a major stamp of approval for the social media giant and its approach to the effort. The consortium members’ investment will be used to fund the creation of Facebook’s coin. Facebook’s crypto, which will be called Libra, according to The WSJ citing people familiar with the matter, will be a stablecoin pegged to a basket of global currencies to avoid price volatility, which has hamstrung other digital currencies, like Bitcoin. The BBC previously reported the crypto’s internal name as GlobalCoin. While Facebook may be building the crypto system around its social network, it nor the Libra Association will have direct control of the crypto. Although, some of the consortium members could serve as nodes participants that verify transactions on the blockchain the crypto runs on and maintain the records.

Notably, despite the Libra Association members committing investments into the project, which has been in the works for over a year, some remain in the dark as to how the coin will work or what their eventual role in the system will be, people familiar with the matter said.By detaching governance of the crypto project from its main platform, Facebook’s already mitigating worries that could have thrown a spanner in the works. Previously, we noted that while the company has the technological prowess and deep resources to make the project a success, continued pressure on its inability, as of yet, to address privacy issues would be a major hurdle it’d need to overcome. Keeping the crypto network separate is therefore likely to help the firm insulate itself from potential regulatory pressures as well as angst from potential partners and its user base, at a time when its reputation continues to languish.The bigger picture is that the likes of Visa and Mastercard are backing a project that could take parts of their business highlights the lure of having access to Facebook’s huge user base.Big tech firms’ threat to financial institutions (FIs) is real. Incumbent FIs, like banks and card companies, have long fretted that increased digitization of financial services would enable tech giants to muscle into their industry and disintermediate them or, at the very least, eat into their revenue by pushing price points down considerably. In fact, tech giants like Apple, Google, and Amazon stand to grab up to 40% of the US’ $1.35 trillion financial services revenue from incumbents per McKinsey.But the Libra Association suggests there’s an opportunity for fast-moving incumbents.

By participating in Facebook’s crypto project, the likes of Visa and Mastercard can not only better monitor the company’s financial services ambitions but also have skin in the game should the effort gain considerable traction with consumers. And their support of a project they know little about highlights how seriously they’re taking this threat. Because, although consumer adoption has been meager in the 10-plus years since Bitcoin was created, Facebook’s almost 2.4 billion monthly active users give it a good chance of driving widespread use of cryptos.

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