Yahoo Finance Facebook announces ‘small pilot’ to test cryptocurrency wallet Novi
Lawmakers have already asked the company to end the test.
Facebook is finally testing Novi, the digital wallet it’s been teasing for more than two years. Facebook’s payments chief David Marcus announced that the company is launching “a small pilot” of Novi in the United States and Guatemala with the goal of enabling family members to send remittances across borders.
“We’re doing a pilot to test core feature functions, and our operational capabilities in customer care and compliance,” Marcus wrote. “We’re also hopeful this will demonstrate a new stablecoin use case (as a payments instrument) beyond how they are typically used today.”
The fact that Novi is finally launching, even in a limited way, would seem like significant step forward for Facebook’s long-troubled crypto plans. However, the company is launching the wallet without Diem, its planned cryptocurrency (previously called Libra) that’s faced a wave of pushback from lawmakers and regulators around the world.
We’re doing a pilot to test core feature functions, and our operational capabilities in customer care and compliance. We’re also hopeful this will demonstrate a new stablecoin use case (as a payments instrument) beyond how they are typically used today. 2/8
— David Marcus (@davidmarcus) October 19, 2021
Instead, the initial pilot will use the Pax Dollar (USDP), a stablecoin that Marcus said has “been operating successfully for over three years and has important regulatory and consumer protection attributes.” He added that Facebook has partnered with Coinbase during the pilot.
News of the pilot has already sparked renewed criticism from lawmakers. On Tuesday, hours after Marcus’ initial announcement, a group of five Democratic senators sent a letter to Facebook asking the company “to immediately discontinue your Novi pilot and to commit that you will not bring Diem to market.” The letter cited the recent disclosures from a Facebook whistleblower, and the company’s “relentless pursuit of profits at the expense of its users.”
“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 wrote. “Facebook cannot be trusted to manage a payment system or digital currency when its existing ability to manage risks and keep consumers safe has proven wholly insufficient.”
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. 6/8
— David Marcus (@davidmarcus) October 19, 2021
A spokesperson for Novi said that “we look forward to responding to the Committee’s letter,” but didn't elaborate. In his initial announcement, Marcus said the company remains committed to launching Diem. “I do want to be clear that our support for Diem hasn’t changed and we intend to launch Novi with Diem once it receives regulatory approval and goes live,” he wrote.
