Facebook yesterday released its new Novi cryptocurrency wallet, initially intended to contain Facebook's stablecoin Diem
Social networking services company Facebook yesterday marked Coinbase as its custodial partner for Novi. The news was great for Coinbase, whose shares soared after being marked as the preferred exchange to offer custodial services to users who subscribe to the portfolio.
Coinbase confirmed the news on Tuesday and explained that the offer would start with a pilot program. Novi platform users will be able to quickly receive and send money abroad, without fees, with the security of their transactions guaranteed. Coinbase Escrow will facilitate transactions. Users will keep their money in Pax Dollar (USDP stablecoin), which they will use to execute transactions.
“Remittances are a critical way to achieve financial inclusion. Today, we are launching 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 without fees " , said the head of Facebook's 'F2' finance division, David Marcus.
Facebook says its choice of USDP stablecoin was motivated by consumer protection, crucial regulatory aspects and full fiat to support the currency. However, Facebook plans to eventually shift its portfolio from USDP to Diem. The technology giant explained that the change occurs because the latter offers better measures and controls for consumer protection.
"Novi's goal was and will always be interoperable with other digital wallets, and we believe that a payment-specific blockchain such as Diem is critical to providing solutions to the problems people face with today's payment system," said Facebook .
Diem was released in 2019 under the name Libra , but the proposed stablecoin was plagued by setbacks and endless analysis. In particular, Senators Brian Shatz and Sherrod Brown wrote to the social networking company to complain that the bill subjected consumers and the financial system to various risks.
Shortly after Facebook launched its Novi portfolio, the two senators along with Richard Blumenthal, Elizabeth Warren and Tina Smith wrote a letter asking Facebook to stop the Diem and Novi projects. Senators blamed Facebook for not showing how it intends to stop 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 risk and keep consumers safe has proven to be totally inadequate. We recommend that you immediately discontinue your Novi pilot and commit to not bringing Diem to market."
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