Meta Is Secretly Pursuing a New Direction into Crypto

Meta is secretly pursuing a new direction into crypto, almost three years after it closed its struggling Diem project. The aim this time is not to build a new digital currency but to leverage current stablecoins to facilitate small payments between platforms such as Instagram.

Meta Platforms (NASDAQ:META) is reportedly planning to use stablecoins for small payments between platforms like Instagram and facilitate efficient cross-border transactions.

What Happened: The social media giant is discussing options for integrating stablecoins with executives at major crypto companies, according to a report by Fortune. The company is still in the early stages of planning and has not yet decided on a specific course of action.

The report adds that the initiative is being led by Ginger Baker, who joined Meta in January as Vice President of Product, spearheading initial discussions about leveraging stablecoins for business and creator payments. Baker has experience in financial technology and crypto, which she will bring to the company as it plans its next move in the crypto space.

The concept of using stablecoins for smaller payouts to creators and businesses is being driven by the need for a more efficient and cost-effective method of remitting small sums, especially cross-border.

Instagram influencers, for example, typically receive payments of around $100 per transaction, which get consumed by high bank fees when remitted across platforms. Stablecoins offer a potentially faster and less expensive alternative.

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Why It's Important: Meta has a history of involvement in cryptocurrency, having previously launched the Diem project, a blockchain initiative that aimed to create a new digital currency. However, Diem faced significant pressure from US regulators and politicians, leading to the project's closure in 2022.

At the time, Meta sold the assets of Diem and appeared to be pulling out of crypto. However, with a new leadership group and a more conservative strategy, the company is now reassessing the industry.

The company is also planning to launch its own metaverse products and integrate them with its existing social media platforms.

Meta's involvement in stablecoins could be a significant development for the crypto industry. Stablecoins are a type of cryptocurrency that is designed to maintain a stable value, typically being pegged to a fiat currency such as the US dollar.

This stability is achieved through a combination of market-driven supply and demand and the use of a collateralization strategy. Stablecoins are used for various purposes, including cross-border payments, micro-payments, and as a means of integrating crypto into existing financial systems.

The integration of stablecoins into Meta's platforms could open up new possibilities for users and creators, enabling seamless cross-border transactions, efficient payment processing, and the development of novel financial products and services.