Facebook (FB) +1.39% has finally launched its digital currency wallet “Novi”, however not with its own cryptocurrency Diem as assumed at the beginning, but with the Paxos Dollar (USDP) instead.
The company decided to choose an existing stablecoin as the Diem project has not been yet approved by regulators, concerned about consumer protection, monetary stability and money laundering. The regulators especially raised concerns about a media giant launching its own cryptocurrency that is backed by non-profit organisations and big tech businesses.
The Paxos Dollar has been chosen as “its reserves were 100 per cent held in cash and cash equivalents, allowing users to easily withdraw money in their local currency”. (The Financial Times, 2021)
The Novi wallet is available in the US excluding Alaska, Nevada, New York and the US Virgin Islands.
Head of Facebook’s Novi wallet, David Marcus said in a blog post that the purpose of the pilot is to prove that Novi serves its customers well.
“Globally, about 1.7 billion adults don’t have access to a bank account but could have access to safe and affordable financial services through mobile phones if the right system existed. Being shut out of the global financial system has real consequences for people’s lives, and it’s often the most underserved people who pay the highest price. Costs are high and waits are long when people want to send money to their families internationally. The current system is failing them, and there is no digital financial architecture to support the innovation we need” he added further in the statement. (Facebook, 2021)
The Novi wallet can be downloaded on iPhones or Android, and to use it users have to register with a form of ID. Custody service for Novi is provided by Coinbase (COIN) +4.19%, the largest cryptocurrency exchange in the US. Transfer between the wallets will be free.
The plan for Facebook’s wallet is to interoperate with other crypto wallets in the future.
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*Stock percentage taken on 20.10.2021 at 11:55.
*Venkataramakrishnan, Siddharth & Murphy, Hannah (19. October 2021). The Financial Times: Facebook launches digital currency wallet Novi. Last viewed on 20.10.2021 on https://www.ft.com/content/b9a61950-a32c-4c77-95fe-fc0d00021a0f.
*https://scontent.ftpa1-1.fna.fbcdn.net/v/t39.2365-6/243566529_1907629929421423_7584572429964174603_n.pdf?_nc_cat=108&ccb=1-5&_nc_sid=ad8a9d&_nc_ohc=RxaLSyJxi90AX--MPX4&_nc_ht=scontent.ftpa1-1.fna&oh=478518419c480923af401eb4556dd5e5&oe=617338BB
