Facebook’s decision to base part of its cryptocurrency project in Geneva is a huge boost for the region’s credentials surrounding blockchain technology, says the canton’s economic development minister Pierre Maudet. The exact purpose of the Libra Networks entity, registered earlier this month, remains shrouded in secrecy.
The United States social media giant Facebook is working on a distributed ledger technology (DLT) project to create a type of digital payment token known generically as stablecoins as they are backed by government-issued currencies. The reported aim is to provide an infrastructure for faster, more cost-effective financial transactions.
The Facebook project has been hailed as a potential breakthrough in the sphere of DLT payments, albeit in a centralised form.
Maudet won’t speak about the role played by the cantonal authorities in bringing the project to Geneva.
“We are extremely excited about Facebook's choice to create a new company exploring new financial technologies in Geneva and look forward to collaborating with its teams in the near future,” he told swissinfo.ch.
According to the Swiss commercial register, the Geneva entity will be responsible for the “provision of services in the fields of finance and technology, as well as the development and production of related software and infrastructure, in particular in connection with investment activities, payment transactions, financing, identity management, data analysis, big data, blockchain and other technologies”.
Geneva, city of blockchain
Besides the US, Facebook’s Libra project also has a team in Tel Aviv. Choosing Geneva as another base can be viewed as a logical step. Besides its tradition in international finance, the city and surrounding region has built a strong blockchain presence.
The French-speaking region of “Crypto Nation” Switzerland features a number of established players in the industry, such as crypto exchanges Bity and Taurus, budding crypto bank Mt Pelerin, real estate platform Tokenestate, commodities trading conglomerate Komgo and crypto storage outfit METACO. Digital bank Swissquote is also developing a range of cryptocurrency services.
The Geneva authorities have proactively embraced the market of generating cryptocurrency funding for start-ups by issuing regulatory guidelines. And they are looking into ways of plugging elements of the civil administrative structure, such as the commercial register, into blockchain.
Furthermore, academic institutions, such as the prestigious Federal Institute of Technology (EPFL) in Lausanne are lending their weight to the development of blockchain. “Our aspiration is to become one of the main blockchain hubs worldwide,” said Maudet, while acknowledging that all that glitters may not necessarily turn out to be gold.
“The new technology still needs to overcome several teething problems in order to become more widely adopted and fully exploited. Security, confidentiality and governance are some of the problems we have identified and are trying to solve.”
New Swiss progress
Another connection between Facebook’s Libra project and Geneva is its boss, David Marcus. He grew up in the city, attended its university for a year before dropping out to establish two start-ups and later moving to the US.
In an interview shown to students at the CREA higher education school, Marcus said Switzerland had progressed since his days living there.
“There are already some encouraging signs, like the country’s position on cryptocurrencies,” he said. “Switzerland is trying to become a lighting rod in Europe for companies that want to develop solutions around these new technologies. It shows an openness and progress that we haven’t necessarily seen in the past.”
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