Facebook yesterday launched its new crypto wallet Novi, initially intended to contain Facebook’s own Diem stablecoin
Social media services firm Facebook yesterday identified Coinbase as its custodial partner for Novi. The news was great for Coinbase, whose shares surged after being named the exchange of choice to offer custodial services to users who will sign up for the wallet.
Coinbase confirmed the news Tuesday and explained that the offer would start with a pilot program. Users of the Novi platform will benefit from the ability to quickly receive and send cash abroad at no cost, with the security of their transactions assured. Coinbase Custody will facilitate transactions. Users will keep their money in Pax Dollar (USDP stablecoin), which they will then use to execute transactions.
“Remittances are a critical way to achieve financial inclusion. Today, we are deploying a small pilot of the Novi digital wallet app in two countries: the United States and Guatemala. People can send and receive money instantly, securely, and at no cost. , ” noted The head of Facebook’s “F2” financial division, David Marcus.
Facebook says its choice of USDP stablecoin was motivated by consumer protection, crucial regulatory aspects and the currency’s full guarantee. However, Facebook plans to eventually move its wallet from USDP to Diem. The tech giant explained that the change is due to the latter offering better consumer protection measures and controls.
“Novi’s goal has been and always will be to be interoperable with other digital wallets, and we believe that a blockchain specifically designed for payments, like Diem, is essential in providing solutions to the problems people face with the current payment system.“Facebook said.
Diem was launched in 2019 as Libra, but the proposed stablecoin has been 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 is putting both consumers and the financial system at risk.
Shortly after Facebook launched its Novi wallet, the two Senators alongside Richard Blumenthal, Elizabeth Warren and Tina Smith writing a letter asking Facebook to stop the Diem and Novi projects. Senators criticized Facebook for failing to show how it intends to thwart criminal activity and illegal financial transactions in its new product.
“Facebook cannot be trusted to run a payment system or digital currency when its existing capacity to manage risk and keep consumers safe has proven to be totally inadequate. We urge you to immediately stop your Novi pilot project and make a commitment not to commercialize Diem. “