Facebook has chosen Coinbase and Paxos as partners for its upcoming Novi digital wallet project, which began testing in the US and Guatemala on Tuesday.
Once regulatory clearance is given, the social media giant will proceed with the launch of Novi, which will be accompanied by the Diem payment network.
For its planned Novi digital wallet project, Facebook has partnered with Coinbase and Paxos. The initiative began its pilot testing phase on Tuesday in the United States and Guatemala, with the whole project expected to launch in 2019.
In both nations, starting on Oct. 19, a limited number of customers will be able to download the Novi digital wallet app on their iPhone or Android smartphones and deposit money into their accounts using a debit card.
In the meanwhile, they will have the option of sending and receiving money in the form of the Pax Dollar (USDP), a dollar-backed stablecoin produced by blockchain trust business Paxos.
USDP was chosen by Facebook for inclusion in its pilot program due to its “significant regulatory and consumer protection characteristics” and “established track record.” Because the USDP reserves are completely backed by cash, Novi users will be able to withdraw their funds in their native currency while using the service.
Coinbase, which oversees $180 billion in assets, will be in charge of the custody of customer funds.
A representative for Facebook stated that the pilot phase would allow the company to assess the wallet’s fundamental operations and demonstrate operational skills, particularly in the areas of customer support and compliance, among other things. Novi is also being built to be interoperable with other digital wallets, which is another feature.
Furthermore, the firm’s spokesman claimed that the company has not abandoned support for the Diem network, which is a permissionless payment system that is currently seeking approval from the federal government. According to the company, “we aim to launch Novi with Diem as soon as it obtains regulatory permission and becomes operational.”
However, while having tremendous political strength in Washington, Facebook has encountered difficulties in getting key officials to support Diem. Since 2019, the planned payment network has gone through numerous design changes, but worries about money laundering and stablecoins have caused the approval process to be delayed.
Policymakers have been pleased by some of the design improvements, according to an article published by Cointelegraph in September.
