Social media giant Facebook is using Coinbase and Paxos for its upcoming Novi digital wallet project. On Tuesday, its testing phase in the United States and Guatemala started.
The test phase will start on Tuesday
Starting Tuesday, a small group of users in both countries will be able to download the Novi digital wallet app on iPhone or Android devices. They can then add money to their accounts with a debit card. From there, they can send and receive money using the Pax Dollar (USDP). This is a dollar-backed stablecoin issued by blockchain trust company Paxos.
Facebook selected the stablecoin in its pilot program because of its important regulatory and consumer protection features. Since USDP reserves are fully cash-backed, Novi users have the option of withdrawing their funds in their local currency.
Customers’ money is held at Coinbase, which manages $180 billion in assets.
A Facebook spokesperson said the testing phase will allow Facebook to evaluate the core features of the wallet and demonstrate operational capabilities. This mainly concerns the customer service and compliance functions. Novi is also being designed for interoperability with other digital wallets.
What will happen to Diem?
The Facebook spokesperson also stated that the company has not given up support for the Diem network. This is a payment system still waiting for the green light from the government. “We plan to launch Novi together with Diem as soon as it gets regulatory approval and goes live.”
Despite considerable lobbying power in Washington, Facebook has encountered obstacles. So far they have not been able to convince policy makers to approve Diem. The proposed payment network has undergone several changes since 2019. Still, concerns about money laundering and stablecoins have slowed down the approval process.