Walmart crypto coin patent could be a back door to banking

Walmart has filed a patent application for a digital currency that, like Facebook's Libra, would be a stablecoin backed by traditional currencies. And it envisions a very specific use case where its coin could stand in for cash — or even for a bank account.

The patent mentions a hypothetical "currency micromarket," defined as "an unattended retail environment where consumers can purchase products from open shelves, coolers, or freezers and use a self-checkout kiosk to pay for their products." It sounds a lot like Amazon Go, a checkout-free retail concept that has been bogged down by lawmakers' insistence that Amazon also accept cash.

In this scenario, Walmart's coin wouldn't just be a substitute for cash; it would function more like a banking relationship: "Customers without traditional bank accounts can create a microbank at an institution such as a retailer, which gains interest while their money is there. A customer buys digital currency, such as at the beginning of a month."

Timothy Fadek/Bloomberg

If Walmart proceeds with this plan it would likely face the same international chorus of regulatory and political pushback that led Facebook to suggest it may not be able to launch Libra.

But other companies that use blockchain see hope in Libra, which could spur greater development and competition. And unlike Facebook, Walmart may not care to invite other companies into the development of its cryptocurrency.

Walmart was the top proponent of MCX, a retailer-led mobile wallet initiative that drew major supporters like Target and Best Buy but ultimately fell apart under its own weight. In other initiatives, Walmart has stubbornly gone it alone — it developed its own Walmart Pay option and still blocks contactless mobile wallets like Apple Pay.

And going it alone may be the right move in the current regulatory climate, considering that Libra partners such as Visa have already begun to distance themselves from Facebook's project.

The move represents another possible attempt by retail giant to spread its financial services wings. Most notably, before the financial crisis Walmart attempted to get a banking license in Utah but abandoned the effort after sharp opposition from banks and community groups.

Walmart would face the same challenges in winning support for a cryptocurrency payments system.

The big-box retailer is locked in a rivalry with Amazon, which has led Walmart to open labs to experiment with in-store and online innovation, such as checkout-free payments. Walmart has also tried a variety of mobile-powered delivery services to extend beyond its traditional retail chain business model.

Walmart did not return a request for comment.