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Facebook has partnered with Coinbase to create a digital wallet that targets the unbanked. The Novi wallet is a project that has been under development for years.
The Novi wallet is still in the testing phase, and its pilot programs will be rolled out in the US apart from Alaska, Nevada, New York, US Virgin Islands and Guatemala. The pilot phase will help test the project’s robustness.
Facebook Pushes for Novi Wallet
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The objective of the Novi service is to enable people to send and receive Pax Dollars. The Pax dollar also known as USDP, is a stablecoin regulated in the US and backed by cash reserves or cash equivalents. The funds that users will transact with will be held on Coinbase Custody, and users will have a chance to trade Pax Dollars with fiat currency in an instance.
In a blog post, the head of Novi, David Marcus, stated that,
We chose USDP so that we can test our systems with a stablecoin that has been operating successfully for over three years and that has important regulator and consumer protection attributes.
Marcus also noted that USDP reserves are fully backed by the US dollar, and will enable people to easily withdraw their money in local currency.
Facebook is also pushing for its own blockchain. The firm has stated that it is working to comply with the legal frameworks and gain regulatory approval to migrate its services to the Diem blockchain.
Facebook’s Diem Project Opposed by Regulators
Facebook’s venture into cryptocurrencies has not been a smooth ride because of regulatory scrutiny. The Diem project is not only facing regulatory scrutiny in the US, but also in Albania, Canada, Australia, the UK and the EU.
To assure users of the protection of their personal data, Facebook has been reassuring its clients that the Novi wallet and Facebook accounts will be two separate entities, with the former focusing on security.
However, despite these assurances, Facebook’s past reputation seems to be working against it. A letter posted on the US Senate website stated that Facebook was untrustworthy, and Diem could pose a risk to financial stability in the United States. However, in a statement, Diem stated that Facebook was not in any way related to Diem.