Facebook partnered with Coinbase to launch its cryptocurrency wallet. Regulators wish to cancel the project, but Facebook and Diem are not giving up.
Facebook has not given up in its quest to harness the facility of the blockchain to increase into the finance enterprise. After failing with its Libra project, the social media giant announced a partnership with Coinbase to roll out its cryptocurrency wallet, Novi.
The launch is still within the testing section. In keeping with an official statement from David Marcus, Head of Novi, Facebook is launching a pilot of Novi available to a small group of people intending to test the robustness of its service.
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The Novi service is available for the USA (aside from Alaska, Nevada, New York, and the U.S. Virgin Islands) and Guatemala, a small Latin American nation located in Central America with the helping of Facebook partnered with coinbase
Novi will allow users to ship and receive Pax Dollars, a US-regulated stablecoin backed by money reserves and cash equivalents. The funds might be held by Coinbase Custody, and customers will be capable to trade their Pax Dollars for fiat currency immediately.
Facebook explains that it decided to launch its cryptocurrency to cater to the unbanked population, a phase of 1.7 billion individuals worldwide. Facebook believes that using Novi might provide an efficient, cost-effective, and profitable alternative for remittances and day-to-day financial transactions.
Moreover, Facebook emphasized that they haven’t given up on their dream to launch a separate blockchain. Facebook additionally assured that along with the technical aspects, they’re working on satisfying all of the authorized necessities to get the go-ahead from the U.S. authorities and migrate all their services to Diem, a native blockchain that was born as a type of evolution of Libra.
Regulators vs Diem
Facebook’s road down the cryptocurrency freeway has been bumpy. Its main karma so far has been its personal popularity. The Cambridge Analytica scandals and different large leaks of private data have raised the alarm amongst regulators who’ve been eager to curb any try to couple a mention of Facebook with a mention of Financial Services.
Facebook is conscious of this, and in the same official note, they reassured that Facebook and Novi accounts are saved separate and that the wallet is built with an emphasis on security.
We know privacy is high of thoughts for Novi prospects, so it will all the time be high of mind for us. We prioritize the safety and privateness of people’s information by encrypting delicate financial information … If we decide a transaction is unauthorized, we provide a full refund back to an individual’s Novi balance. People’s Novi accounts and Facebook accounts are separate.
However this was not sufficient for some regulators like the anti-crypto Elizabeth Warren and a committee of 4 different senators who have been already demanding Facebook to cancel the venture a few hours after the announcement.
In keeping with a letter published on the U.S. Senate website, the senators consider that Facebook is untrustworthy and that the launch of Diem could be risky for the financial stability of the USA:
“Unfortunately, Facebook’s resolution to pursue a digital currency and payments network is just one more instance of the corporate “moving fast and breaking issues” (and in too many cases, misleading Congress so as to take action) … Facebook can’t be trusted to manage a payment system or digital currency when its present potential to handle risks and preserve customers secure has confirmed wholly inadequate. We urge you to right away discontinue your Novi pilot and to commit that you will not bring Diem to market.
The Diem Association countered by issuing a statement recalling that Diem is a separate entity from Fb, that Fb’s initiative was not related to Diem, and that a senior regulator said that “Diem is the best-designed stablecoin project that the U.S. government.