Facebook tests its Novi digital wallet in the United States and Guatemala
Facebook has just announced a first test of the Novi digital wallet. In a thread on Twitter, David Marcus, the current head of the financial division of the social network, clarified that a small-scale pilot project has been deployed in the United States and Guatemala. Only a handful of users can install the Novi app on their smartphone.
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. 1/8
– David Marcus (@davidmarcus) October 19, 2021
“People can send and receive money instantly, securely and at no cost. We are running a pilot project to test core functions and our operational capabilities in customer service and compliance, ”says David Marcus.
To develop the Novi wallet, Facebook has partnered with Paxos, a New York financial institution specializing in blockchain, and the famous cryptocurrency exchange Coinbase. The platform has been tasked with protecting the funds of wallet users through Coinbase Custody, the structure that provides a secure custody solution that includes an insurance program of up to $ 320 million. A true safe for cryptocurrencies, Coinbase Custody currently manages $ 180 billion in digital assets, Coinbase says on its blog.
Thanks to these two experiments, the Californian group hopes to demonstrate the interest of stablecoins as a payment instrument “beyond the way they are generally used today”. The first stablecoin used by Novi is the Pax Dollar (USDP). Deployed for 3 years, the Pax Dollar is a regulated currency fully backed by the Paxos treasury. The American firm assures that this is the “safest digital dollar”. Facebook has obviously turned to Paxos to calm the concerns of financial regulators.
“USDP was chosen as the first stablecoin partner for Facebook and Novi due to Paxos’ strategy focused on regulation,” Paxos said in a statement posted on its website.
Secondly, Novi should make it possible to store and transfer Diem tokens, the stablecoin developed by the Diem Association, an organization independent from Facebook. Facebook will wait until Diem is available before deploying its cryptocurrency wallet to all users of its services. A pilot Diem program would be in place by the end of 2021.
“I would like to point out that our support for Diem has not changed and that we intend to launch Novi with Diem once it has received regulatory approval”, underlines David Marcus.
As a reminder, the Novi wallet will eventually be integrated into the services and applications of the Facebook group, namely Messenger, WhatsApp or Instagram. Formerly called Calibra, this digital wallet will allow Internet users to exchange currencies free of charge. In the future, Facebook also wants its wallet to integrate features related to NFTs.
👉 On the same topic: Coinbase appoints former Facebook top executive as Chief Marketing Officer (CMO)
US Senators Demand Facebook Stop Novi Testing Immediately
Unsurprisingly, the announcement of this pilot program angered lawmakers. A few hours after the release from Coinbase, Paxos and Facebook, 5 senators from the United States publicly opposed the project. Among senators fiercely opposed to Novi is Elizabeth Warren. The vice-president of the Democratic group in the Senate has regularly displayed against cryptocurrencies.
Recently, she also called the cryptocurrency a “new shadow bank” before encouraging the Federal Reserve of the United States to crack down on stablecoins. In a joint letter to Mark Zuckerberg, CEO and founder of Facebook, senators urged the company to immediately drop the Novi wallet test.
“Given the scale of the scandals surrounding your business, we are writing to express our strongest opposition to Facebook’s relaunched effort to launch a cryptocurrency and digital wallet. […] We cannot trust Facebook to manage a payment system or a digital currency, ”the 5 senators declared in the letter.
Lawmakers say the company lacks the proper permissions to offer its wallet to its US users. According to a spokesperson, Facebook is preparing to respond to the letter from lawmakers.
👉 To read on the same subject: Facebook’s Diem reaches 50 million transactions during its testnet
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About the author: Florian Bayard