Facebook Launches Novi Pilot Program, Receives Pushback From Senators

Facebook has launched a pilot version of its Novi digital wallet in the U.S. and Guatemala, allowing users to send and receive money using the Paxos Dollar (USDP) stablecoin, Novi said in a press release on 19 October.

According to the announcement, Facebook’s digital wallet subsidiary has partnered with popular crypto exchange Coinbase, which will provide custody services to customer funds. Novi has also selected USDP — a dollar-backed stablecoin issued by Paxos — for its trial program due to its proven track record and “important regulatory and consumer protection attributes”. David Marcus, the head of Novi, said in the press release:

“We know privacy is top of mind for Novi customers, so it will always be top of mind for us. We prioritize the security and privacy of people’s information by encrypting sensitive financial information. We have built-in protections against fraud and an entire team dedicated to that work.”

Users in the U.S. and Guatemala can already download the Novi digital wallet from the Apple App and Google Play Store, though it will be available only to a limited number of people, with the rest being placed on a waitlist. Once the app has been downloaded, customers can purchase USDP through Novi, which will then deposit the funds to Coinbase for safekeeping.

Novi (previously known as Calibra) was announced alongside Facebook’s plans to create a stablecoin — first called Libra, and later rebranded to Diem — backed by a basket of currencies back in 2019. Following regulatory pressure, Facebook had to change the scope of its project.

It appears that the pressure on Facebook continues, with five senators sending a letter to Mark Zuckerberg only hours after Novi’s pilot was released, demanding he “immediately discontinue” the project. The letter came from the office of Senator Brian Schatz, and was signed by Tina Smith, Richard Blumenthal, Sherrod Brown, and Elizabeth Warren. It reads:

“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.”