Facebook Partners with Coinbase to Pilot Novi Digital Wallet in US

Facebook debuted its rebranded Novi cryptocurrency wallet on Tuesday in limited fashion, launching pilot programs in the US and Guatemala. The wallet comes without Diem, the stablecoin initially spearheaded by the company.

Novi, which will be available as an app from both the AppleApp Store and Google's Play Store, will allow users to send and receive the Pax dollar, a coin run by blockchain company Paxos. Coinbase, the crypto exchange that went public earlier this year, will provide custodial services.

However, Novi says it plans on incorporating Diem one day. “Our support for Diem has not changed,” the company says. “We intend to migrate Novi to the Diem payment network once it receives regulatory approval.”

When or if that regulatory approval will arrive remains unclear. But in the meantime, Novi plans on using the Pax Dollar, which has been around for the last three years, to test the wallet’s systems. The company is also tapping Coinbase to help facilitate the transactions.

Facebook created the wallet with the goal of giving people without bank accounts an easy and secure way to access financial services. “Costs are high and waits are long when people want to send money to their families internationally,” Novi notes. "The current system is failing them, and there is no digital financial architecture to support the innovation we need."

The company’s wallet tries to fill the void by using blockchain technologies to essentially move the money over the internet. “On Novi, 1 USDP is equal to 1 US dollar,” Novi says. “People will send USDP, but their recipients can withdraw the money in their local currency. They can keep the money in their Novi balance or withdraw it by picking up cash at a nearby location or transferring it to their bank account.”

However, a big challenge facing the wallet’s adoption is Facebook’s notorious reputation for data collection and digital privacy. To sign up for Novi, you’ll have to supply a valid government ID and provide a debit card to add money. However, Novi has provided an explainer promising that data shared with the company is often siloed off from Facebook’s own network.

“Your Novi account is separate from your Facebook account and your Novi activity is never posted to your Facebook profile,” it adds. 

“Novi will only share information with other Facebook Companies to help us keep Novi safe for everyone, comply with the law, provide basic functionality and allow us to advertise Novi services,” the company says. “Even in these cases, Novi does not share your financial information with Facebook for Facebook’s own advertising purposes.”

You can currently download the digital wallet from the Google Play Store and the Apple App Store. During the pilot, only a limited number of users will be able to sign up. The app is not available for the US users in Alaska, Nevada, and New York.

October 20, 2021