US Senators Calls Facebook to ‘Immediately’ End Novi Pilot Program Using Paxos Dollar (USDP) & Coinbase Custody
The call came right after Facebook launched its digital wallet Novi through which it will “offer free person-to-person payments” that will ultimately use stablecoins Diem, pending regulatory approval.
Social media giant Facebook has launched its new digital wallet Novi.
The wallet is being rolled out in a small pilot program starting with the US and Guatemala to enable people to send and receive money abroad instantly with no fees.
Novi users will deal in the Paxos Dollar (USDP), a $935 million market cap stablecoin. Facebook chose USDP because it has “important regulatory and consumer protection attributes,” and its “reserves are fully backed by the U.S. dollar and are held 100% in cash and cash equivalents,” said the company.
Ultimately, it intends to migrate Novi to its own stablecoins Diem once it reviews regulatory approval. Additionally, the goal of NOVI has always been interoperability with other digital wallets. David Marcus, the head of F2 (Facebook Financial), said,
“Beyond the pilot, our business model is clear. We’re a challenger in payments. We’ll offer free person-to-person payments using Novi. Once we have a solid customer base, we’ll offer cheaper merchant payments and make a profit on merchant services.”
Say goodbye to delays and fees and say 👋 to Novi — currently rolling out in Guatemala and most of the United States on the Apple App Store and Google Play Store. Check back here for the latest updates on availability, or visit https://t.co/STs3PiQnvv pic.twitter.com/ESoavo5nym
— Novi (@novi) October 19, 2021
Facebook has also chosen crypto exchange Coinbase to help with custody of cryptos, which the company will offer to users who sign for an early test version of the Novi wallet.
As of June 30, Coinbase Custody has been managing $180 billion of crypto assets on its platform. The exchange said,
“Novi users also benefit from Coinbase Custody’s leading insurance program, which includes a $320 million commercial crime policy.”
Following the Novi launch, U.S. Senators Brian Schatz (D-Hawaii), Sherrod Brown (D-Ohio), Elizabeth Warren (D-Mass.), Tina Smith (D-Minn.), and Richard Blumenthal (D-Conn.), voiced their opposition to Facebook’s Diem stablecoin project.
The senator ordered Facebook CEO Mark Zuckerberg to “immediately discontinue the company’s pilot of Novi” and end the project because the company can't be trusted to protect user data or manage a payment network.
”We urge you to immediately discontinue your Novi pilot and to commit that you will not bring Diem to market,” the lawmakers wrote in an open letter Tuesday just hours after the launch of Novi’s pilot program.
“To be clear, your ability to secure state-issued money transmitter licenses is not equivalent to obtaining the blessing of ‘all U.S. regulators,’ as you said in your testimony two years ago.”
The same day came the reports that Facebook is planning to change its company name to reflect its focus on building the metaverse, reported The Verge, citing a source with direct knowledge of the matter.
Zuckerberg is reportedly planning to talk about the change at the company's annual Connect conference on Oct. 28.