Facebook has incorporated a company called “Libra Networks” in Switzerland, which likely develops the company’s blockchain-based payment network. Facebook’s primary consideration is probably the Swiss privacy law.
Facebook has chosen Geneva, Switzerland, to launch its new company “Network Libra.” The Fintech was registered on 02nd May. Libra is also the name of Facebook’s blockchain-based payment system which is currently in development – certainly no coincidence!
According to the official filing, Libra Networks provides “…services in the fields of finance and technology, as well as the development and production of software and related infrastructure, in particular in connection with investment activities, the operation of payments, financing, identity management, data analysis, big data, blockchain and other technologies.”
Project Libra: Facebook-internal payment network based on stablecoin
So, what exactly is Project Libra? Facebook has not provided great detail. According to the Wall Street Journal (WSJ), it is a payments network within the Facebook ecosystem and based on a stablecoin backed by government currency.
The WSJ also reported Facebook is in discussions with Visa and Mastercard and is seeking up to $1 billion to create a pool of collateral that can act to back up the stablecoin. The main purpose of the coin is to eliminate credit card fees for merchants while avoiding the volatility of free-floating cryptos like BTC or ETH.
What’s also worth noting: Yesterday, the blockchain platform Zulu Republic announced that its cryptocurrency messaging platform Lite.Im had introduced a simple way to send and receive Bitcoin via WhatsApp, which also belongs to Facebook. Interesting timing.
Move to Switzerland likely based on Swiss privacy laws
So there it is, Facebook is looking for Swissness. Little surprising, the US has recently not been very accommodating for either crypto projects nor Facebook’s data policies.
When the WSJ first reported about Libra, US lawmakers sent an open letter to the company seeking clarification on the currency’s purpose and implications. They wrote:
“The WSJ recently reported that Facebook is recruiting dozens of financial firms and online merchants to help launch a cryptocurrency-based payments system using its social network. Last year, Facebook asked U.S. banks to share detailed financial information about consumers. In addition, privacy experts have raised questions about Facebook’s extensive data collection practices and whether any of the data collected by Facebook is being used for purposes that do or should subject Facebook to the Fair Credit Reporting Act.”
To be able to build a secure and privacy-oriented system it is essential not only which technologies are used, but also where the data is stored and where the servers are located.
Besides a blockchain-friendly approach, Switzerland also has strict federal laws and regulations in place for data privacy and protection. That makes Switzerland a top county for setting up a system that requires high privacy standards.
The letter sent to Facebook had a particular focus on privacy. Moreover, Facebook’s global reputation had taken a major hit when the Facebook-Cambridge Analytica scandal became public and revealed Facebook’s poor data practices.
Thus, the company’s decision to incorporate the project in Switzerland might be an attempt to fix this image – and to escape the increasing scrutiny of US lawmakers.