The unveiling of Facebook’s latest plans for world domination should be of big interest to the funds industry. Project Libra is the social media corporation’s plan to issue its own cryptocurrency along with a digital wallet scheme.
According to Facebook, its primary mission is financial inclusion and to bring cross-border banking to the 2.5 billion unbanked around the world. To others, it is all about data and Facebook’s desire to tap into new wells of information.
Regulators have been quick to respond, with the French minister of finance stating that “it is out of the question” that Libra should become a “sovereign currency”, while the chair of the US House Financial Services Committee has asked Facebook to postpone its plans until it has investigated the implications for the financial system.
While Project Libra may appear to have no direct impact for asset managers, the indirect implications are huge. Should Facebook succeed in overcoming the regulatory, political and technical challenges, it will show other big tech firms that the financial services market is ripe for an assault.
It will also legitimise the idea of decentralised ledgers and tokenised assets such as bitcoin. It may be money and banks that face the threat first, but funds and fund managers will surely not be far behind. The world will watch and wait, but some will be watching through their fingers.
Nicholas Pratt, Technology & Operations Editor
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