Facebook has finally launched a pilot program for its Facebook Novi project. However, the pilot is missing the Diem cryptocurrency. Users will be allowed to send funds securely across international borders at zero fees.
Details Of The Pilot
The pilot will run in the US and Guatemala. However, it will not be accessible to those in Nevada, Alaska, New York, and the US Virgin Islands. For now, the program only offers support for USDP, which is a stablecoin created by the Paxos Trust Company. According to Paxos, USDP is the world-leading regulated stablecoin that is pegged to the USD via 100% cash reserves.
The pilot program for Novi wallet will be supported by Coinbase, which will act as a custody partner via Coinbase Custody. According to a blog post by Coinbase, user funds will be held by Coinbase Custody Trust Co, which is a qualified custodian in New York, which is fully regulated in the state. Users of Novi will benefit from the insurance cover provided via Coinbase Custody that includes a $320 million crime policy.
At present, Coinbase Custody manages crypto assets valued at around $180 billion. It is designed to offer deep expertise in crypto assets management using a secure and scalable infrastructure.
Why Paxos?
The decision to use Paxos as the stable coin provider is a good one. The reason for this is that it is fully regulated and legal. However, it is not anywhere close to the top 100 crypto coins. According to current market prices, the market cap is around $74 million. Each USDP coin is currently trading at 96.45 cents, well below the pegged $1 rate. However, that could change due to this revelation.
A Short History Of The Novi Project
The Novi project has had a short but interesting history. Initially, it was called the Calibra wallet before being changed to Novi in May 2020. Initially, Facebook revealed its efforts into the crypto sector via the Facebook Libra project in 2019. However, after a fierce backlash from legislators, several changes were made to the project. The changes also involved changing the name of the Libra coin to Diem.
Since Facebook reinvented the project, the backlash has not been as severe. However, it lost most of the initial partners in the project when regulatory backlash became too intense. Most of the payment partners quickly departed the project when legislators threatened unspecified action. One issue that legislators had with the project was that Facebook, which was facing serious data handling violation allegations, could potentially handle the payments data of millions of people globally.
What Will Users Get?
While Facebook is still awaiting approval for the Diem digital currency, users within the pilot program will only have access to a digital wallet. The digital wallet will only offer support for the USDP stable coin. While it might not be the most popular or well-known, the fact that it has Facebook’s backing could push it to the top of the pile. However, many in the crypto sector who were expecting something groundbreaking from such a major tech company might be disappointed.
What Leadership Had To Say
According to the statement by Coinbase, they stated that:
“We believe that in the future, every company will be a crypto company, including fintech platforms, banks, social media, gaming companies, and consumer brands.” They added that “Our goal is to arm them with the best tools possible so their own users have a first-class experience and participate in the crypto-economy.”
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