Already two years removed from the day it first announced its planned digital asset, Facebook has continued to push the coin’s agenda in any way it can.
Recently, the company teamed up with Coinbase - North America’s largest crypto exchange - to extend the functionality of its crypto wallet as it inches ever closer to the device’s launch.
Facebook announced that it had partnered with Coinbase to help smooth out the logistics for its new digital wallet - called Novi. According to a blog post, the partnership came in line with Novi’s rollout for tests, with Facebook now running pilot programs for the wallet in the United States and Guatemala.
Pushing Novi Forward
As part of the tests, a small number of users in both countries would be able to download the Novi wallet on Android and iOS. They will be able to add money to their accounts, using channels such as bank transfers and cards. From there, these users will be able to send and receive money using the Pax Dollar (PAX) - a dollar-pegged stablecoin from the third company in this partnership; Paxos.
As the blog post explained, Coinbase will offer Novi its cold storage infrastructure. The exchange will also offer its Coinbase Custody service to Facebook, allowing the social media giant’s welt users to store their funds - regardless of the amount.
"Coinbase Custody is a leading crypto-native platform and custodian that securely manages $180 billion of crypto assets on its platform. Over the past nine years, Coinbase has developed deep expertise in secure and scalable crypto infrastructure, which we initially built to power our own first-party applications," the blog post read in part.
An Interesting Stablecoin Partner
It is interesting to see Facebook using PAX for its digital wallet, instead of Coinbase’s USDC stablecoin. Over the past few months, stablecoin regulation has been an incredibly important regulatory pain point. Big names like USDT and USDC have come under fire for their reserves, with critics pointing out that their distributors might have created more units of the stablecoin tokens than they actually have reserves for.
Facebook appears to have glossed over USDC, even though the coin has a larger share of the global stablecoin market. Not looking to cause any trouble, the social media giant has chosen a much safer stablecoin partner.
PAX reserves are fully backed by cash, unlike other popular stablecoins. This means that Novi users will be able to withdraw their money in their local currencies whenever they want to. A spokesperson for Facebook told reporters that this pilot program will help the company evaluate Novi’s core functionalities while also showcasing possible use cases - especially in terms of compliance and customer service.
Facebook still doesn’t have a launch date for Novi. The company finished work on the wallet months back, but it will need to run several pilots and tests to ensure that everything works as it should. A launch this year is looking less and less likely, so fans will need to wait a while longer to see how things eventually turn out.
Diem Still Gets the Cold Shoulder
As for the company’s digital asset, not much has been made in terms of progress. Regulators remain committed to killing the coin - which was announced as “Libra” but is now called “Diem - before it even launches.
A few days after Facebook announced its Coinbase partnership, five Senators called for the company to immediately shut the wallet down. In a letter sent to company chief executive Mark Zuckerberg, the Senators - including notable crypto skeptic Elizabeth Warren (D-Mass.) urged Facebook to shut down Novi due to its checkered past. They said in part:
“Given the scope of the scandals surrounding your company, we write to voice our strongest opposition to Facebook’s revived effort to launch a cryptocurrency and digital wallet, now branded ‘Diem’ and ‘Novi,’ respectively.”
The Senators claimed that Facebook has continued to act in a way that is detrimental to its users’ safety, adding that the company can’t be trusted to manage a digital asset or a payment system now when it has failed to address some of its most long-standing problems.
Regardless, Facebook will press on. In response to the letter, the Diem project claimed that the Senators had misunderstood its ties with Facebook. Diem claimed to be an independent organization from Facebook, with Novi being just one of the many members of its Diem Association.
While Diem’s assertion is technically correct, it will do little to quell the doubts that these lawmakers have. Many of them believe that Facebook is a dangerous organization, and that perception will spread to everything the company touches or does - no matter how much it tries to distance itself from the company.