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- Facebook launched Novi, its digital wallet for crypto, and has tapped Coinbase to be its custody partner.
- Novi users will be able to transact paxos dollar, a stablecoin whose value is pegged to the US dollar.
- David Marcus, head of Novi, said he chose USDP because it is fully backed by the US dollar.
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Facebook launched Novi, its digital wallet for cryptocurrencies Tuesday, and has tapped Coinbase to be its custody partner, according to an announcement.
The custody arm of Coinbase will support Novi by keeping funds secure when users sign up for the pilot program, which is now available in the US and Guatemala. Through Novi, users will be able to transfer money abroad instantly and with no fees.
Coinbase Custody, with its cold-storage capability for managing private keys, is a qualified custodian and managed $180 billion of crypto assets on its platform as of June 30, 2021.
Novi users will be able to transact paxos dollar or USDP, a stablecoin created in 2018 whose value is pegged to the US dollar. USDP ranked 100th on CoinMarketCap as of Tuesday with a valuation of $946 million. Tether, the largest stablecoin, is ranked fifth overall with a market capitalization of $69 billion.
David Marcus, head of Novi, chose USDP because it is fully backed by the US dollar and is held 100% in cash and cash equivalents, according to a statement. "This means that people can easily withdraw their money in their local currency when they choose," he added.
Novi then plans to integrate with Diem, a Facebook blockchain-based payment system, pending regulatory approval. "The goal of Novi has been and always will be to be interoperable," Marcus added. "Imagine if you couldn't send an email from a Gmail address to a Yahoo address."
Novi, according to a May 2020 blog post, was inspired by the Latin words "novus" for "new" and "via" for "way." It was created so that "sending money will be as easy as sending a message," the post said, through a standalone app just like WhatsApp and Instagram.
Facebook has been working on it since 2019, when it was originally named Calibra, likely to highlight Facebook's own digital currency libra.
But stablecoins have recently been placed under heightened scrutiny, particularly tether, for "misleading claims" on having sufficient US dollar reserves back its every token.