Facebook has come a long way from its days of being an outsider in the crypto industry. The company has become an evangelist for cryptocurrencies, and it has been working for the past two years to get its own asset out into the market.
However, while Facebook has made significant progress into crypto, the company’s plans remain highly shroud in controversy - a controversy that it might now have to keep contending with.
Novi is Ready for Liftoff
Last month, a Facebook executive confirmed that its developers were done with Novi - the digital wallet service for its cryptocurrency. David Marcus - the head of Facebook’s financial services division - confirmed that Novi was ready to go to market in a blog post.
Speaking about the company’s plans, Marcus explained that Facebook will be looking to disrupt the current cross-border payment landscape - which remains incredibly slow and expensive. Novi will bring a breath of fresh air to that, making it easier and more convenient for people to send money near-instantly.
Novi is set to be the wallet for Diem - Facebook’s stablecoin. The asset, first released in 2019 under the name “Libra,” has gone through several changes and tweaks. Facebook had initially expected to face some stern challenges following Libra’s launch, but things turned out to be much more difficult than the social media giant emphasized. The company’s stablecoin had been criticized by regulators home and abroad and several experts in the crypto space.
To wit, Facebook changed “Diem,” making the asset a dollar-backed stablecoin alone. This is different from the original design, which would see the coin backed by a basket of some of the world’s most popular fiat currencies.
Diem Still Stalls for Now
All of these changes haven’t exactly yielded results since Diem is still broadly hated. Last week, The Washington Post reported that Facebook is still having problems with convincing officials in Washington about the benefits of Diem. The report pointed out that Marcus met with regulators early in September, where he argued about crypto’s place in banking the unbanked and opening a much broader financial climate for everyone.
While the regulators have expressed pleasure over some of the changes being made to Diem, many remain unconvinced. Feelers pointed out that Treasury Secretary Janet Yellen and several other members of Congress are still skeptical about the company’s plans. More and more, it seems like Facebook will need to continue scratching at Diem to get it to fly. Even if it eventually does, the asset would be much different from the original design - something that might reduce demand for it.
Interestingly, Facebook looks to be getting some traction with Novi - even while Diem stalls. In a recent blog post, Marcus said that Novi had been approved in almost every state across the U.S. The executive added that the wallet would eventually launch, although states that haven’t given approval won’t be able to access it.
At the same time, Facebook is consulting with several notable international regulators to see how they could accept Novi. The blog post even revealed some of Novi’s functions, including free peer-to-peer payments for local and foreign clients. Facebook will be looking to build a strong customer base for Novi, ensuring that the wallet can benefit from merchant payments over time.
From peer-to-peer payments, Novi will be able to expand to several other financial services in partnership with regulators, Marcus added.
Looking Beyond Diem
Addressing the criticism for Diem and the possibility of the asset never seeing the light of day, Marcus expressed confidence in Facebook’s ability to still make positive change if they offer Novi alone. In the first blog post, Marcus pointed out that Novi on its own can help people to send money across borders quickly and more conveniently while also benefitting Facebook.
"So why not just do that and call it a day? Well, we might. But before we do, I strongly believe if there was ever a chance to create an open, interoperable protocol for money on the internet and truly change the game for people and businesses around the world, it is now," he added.
While Facebook remains committed to launching Diem, the company is also looking into newer aspects of the crypto industry. Last month, Marcus told Bloomberg that the social media giant is also looking into supporting non-fungible tokens (NFTs). As the company executive pointed out, Facebook is looking at different routes as it hopes to introduce NFT features to its customers.
Marcus said that Facebook is in a good position to get this done, especially considering how effective a wallet like Novi will be. The wallet might end up offering the possibility of buying and storing their NFTs, adding one more layer of functionality to it.