Facebook yesterday launched its new crypto wallet Novi, initially meant to hold Facebook’s own Diem stablecoin
Social networking service company Facebook yesterday tagged Coinbase as its custody partner for Novi. The news was terrific for Coinbase, whose shares surged after being earmarked as the exchange of choice to offer custodial services to users who will sign up to the wallet.
Coinbase confirmed the news on Tuesday and explained that the offering would start with a pilot programme. Users of the Novi platform will enjoy the ability to promptly receive and send cash overseas with no fees, with the security of their transactions assured. Coinbase Custody will facilitate the transactions. Users will hold their money in Pax Dollar (USDP stablecoin), which they will then use in executing transactions.
"Remittances are a critical way to achieve financial inclusion. Today, we're rolling out a small pilot of the Novi digital wallet app in two countries — the US and Guatemala. People can send and receive money instantly, securely, and with no fees," said Facebook's head of the 'F2' financial division, David Marcus.
Facebook says its choice of the USDP stablecoin was motivated by consumer protection, crucial regulatory aspects and the full fiat backing the currency holds. However, Facebook plans to eventually shift its wallet from USDP to Diem. The tech giant explained that the switch is because the latter offers better consumer protection measures and checks.
"The goal for Novi has been and always will be to be interoperable with other digital wallets, and we believe a purpose-built blockchain for payments, like Diem, is critical to deliver solutions to the problems people experience with the current payment system," Facebook stated.
Diem was launched in 2019 under the name Libra, but the proposed stablecoin was plagued by setbacks and endless scrutiny. In particular, Senators Brian Shatz and Sherrod Brown wrote to the social networking company to complain that the project subjected both consumers and the financial system to several risks.
Not long after Facebook launched its Novi wallet, the two senators alongside Richard Blumenthal, Elizabeth Warren and Tina Smith penned a letter asking Facebook to halt the Diem and Novi projects. The senators faulted Facebook for the failure to show how it intends to thwart criminal activities and illegal financial transactions in its new product.
"Facebook cannot be trusted to manage a payment system or digital currency when its existing ability to manage risks and keep consumers safe has proven wholly insufficient. We urge you to immediately discontinue your Novi pilot and to commit that you will not bring Diem to market."