Facebook provides unveiled the Novi digital foreign currency wallet pilot in the usa and the Central American country of Guatemala on Oct 19. As the wallet is free from any charges (at the moment), operates with KYC and mainly centered on remittances, the interesting component is that Facebook provides retired its Diem cryptocurrency task and only the Ethereum based Paxos released USDP stablecoin – an ERC 20 token with custody providers getting sourced from Coinbase.
Restricted Rollout
The restricted rollout bears the “Move the amount of money instantly without fees” allows an individual to send/receive and hold USA Dollars (USD) comparative USDP stablecoin. It also supplies the users to down payment and withdraw from / to their local currency.
There aren’t many details on how Facebook’s Novi employs the Ethereum blockchain, however the general explanations are either Ethereum L2 usage or usage for only final settlements, as the remaining time, only the inner ledger is updated. Facebook’s Diem is really a Libra rebrand to create a permissioned payment system on the blockchain. It would appear that it has been shelved for the moment, due to the regulatory concerns
Ethereum Blockchain
Facebook’s decision to utilize the Paxos’s issued highly regulated stablecoin USDP and the Ethereum blockchain isn’t very surprising. The social media marketing company has faced severe criticism and warnings of regulatory repercussions from several parts of the United States Government. Even with Novi’s launch, several US lawmakers asked Facebook to prevent the project saying it poses risks to financial stability, however it’s unlikely that the prevailing regulations would have much effect on open source system’s component that Facebook has sourced it’s latest product from.
In a letter sent by US Senators Brian Schatz (D-HI), Sherrod Brown (D-OH), Elizabeth Warren (D-MA), Richard Blumenthal (D-CT) and Tina Smith (D-MN) on Oct 19. The senators remarked that “Facebook is once more pursuing digital currency plans on an aggressive timeline and contains already launched a pilot for a payments infrastructure network, despite the fact that these plans are incompatible with the specific financial regulatory landscape”.
In addition they expressed dissatisfaction on the Novi plans in the next words ” Facebook can’t be trusted to control a payment system or digital currency when its existing capability to manage risks and keep consumers safe has proven wholly insufficient. We urge one to immediately discontinue your Novi pilot also to commit that you’ll not bring
Diem to advertise”
About Facebook’s Diem
The project was initially called “Libra”. It’s a pseudo decentralized permission blockchain payment system with the purpose of handling digital transactions. Facebook’s vision for Diem includes allowing quick access to a person with basic internet services, guaranteed price stability, less processing time, scalable interface and a walled ecosystem.