MercadoPago and Xapo, two Latin American companies joining Facebook’s Libra Association

MercadoPago and Xapo
MercadoPago and Xapo

Contxto – The recent announcement of Facebook’s newest crypto-project, Libra, has provided much to talk about. While many think that this initiative is reserved for big-tech and foreign companies, that’s not necessarily the case.

In summary

There are two Latin American companies partnering with Facebook and joining the Libra Association Board. These include MercadoPago and Xapo, both from Argentina.

Facebook launched the new cryptocurrency this past Tuesday. With it also came the announcement of an independent regulatory entity, The Libra Association. Comprised of 28 founding members from tech companies, to financial institutions, non-profits, among others, the organization will be overseeing, monitoring and regulating the currency from its Swiss headquarters.

According to the released White Paper, this organization is the only authority capable of creating and destroying the currency. It will also manage the reserve to achieve stability and growth of the Libra. Think of it as a Central Bank in charge of monetary policy. Although, honestly, this doesn’t make much sense since the main point of cryptocurrency is to eliminate centralization. But that’s a talk for another day.

In-depth

Among other members are Visa, Mastercard, Paypal, PayU, Stripe, Spotify, Lyft, eBay and Andreessen Horowitz. On top of that, Facebook is joining the association under a subsidiary.

Founding members of The Libra Association.

In order to create a certain distance from the control of the currency, Facebook also launched Calibra. This is a crypto wallet that will work in conjunction with WhatsApp, Messenger and as a separate app (by 2020).

Calibra will enable users to save, send and spend Libra currency as they please. “Calibra will allow you to transfer the currency Libra to practically any person who owns a smartphone, as easy and instant as sending a text message, and with low to no-cost at all,” informed the company.

MercadoPago, the financial offshoot or MercadoLibre, is joining the Association with a very particular goal in mind. The company is seeking to diminish the costs and friction of international money transfers.

“One of the greatest challenges are international transfers,” said Osvaldo Jimenez, Vice-president of MercadoPago during an interview. “The problem is that if you try to do it today, it is expensive. Even 30 or 40 dollars more if you do it through a bank transfer. Therefore, it seems that the fact of having a common cryptocurrency that is used across 28 of the main payment platforms will allow many more people to send money and that the majority of that actually arrives on the same day.”

Xapo, the blockchain and financial security firm, is one of the participating blockchain companies. Others are Coinbase, BisonTrails and Anchorage.

-VC

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