In a recent op-ed article, TechCrunch writer Darrell Etherington compared Facebook’s recently announced Libra coin to Kik’s Kin token that appeared in the SEC’s crosshairs. It seems that the two projects have striking similarities, but it remains to be seen whether Facebook will face the same level of regulatory scrutiny.
One crucial difference
As reported by U.Today, the SEC took Kik to court over an allegedly illegal ICO on June 4. Prior to that, the Canada-based company launched the ‘Defend Crypto’ crowdfunding campaign to fight the US regulator.
While Kik is entangled in the legal battle, another (much, much bigger) social network has recently presented its own cryptocurrency. Unless you decided to take a break from the Internet today, you’ve already seen countless headlines about Facebook’s dollar-pegged stablecoin called Libra.
So, how are they similar? According to Etherington, there are plenty of similarities between the two projects (particularly, when it comes to their incentive model), but there is also one crucial difference: the scope of the company.
Crypto as a hedge
Despite conducting a $100 mln ICO back in 2017, Kik never had an opportunity to onboard such big-name partners as Visa or Paypal. All these big names became part of the Libra consortium that will preside over the project.
On top of that, Kik needed the ICO to stay afloat after its core audience of US teens started abandoning the messenger. Facebook can absolutely survive without crypto because of its lucrative advertising-based revenue model. Hence, Libra is just an additional revenue stream.
The question to answer will be whether and when Facebook’s efforts here switch from being a hedge to a necessary commitment to ensure survivability.