Facebook has tapped bitcoin exchange platform Coinbase for the pilot of its new digital wallet, Novi, which will enable users to send and receive money instantly, securely and with no fees.
Novi users who participate in the pilot, which kicks off Tuesday in U.S. and Guatemala, can receive Pax Dollar USDP through their account, which will be held on deposit using Coinbase Custody. One USDP is the equivalent of $1.
Bitcoin owners will then be able to transfer Ethereum instantly between each other. Users can withdraw the money in their local currency or transfer the funds to their bank account.
We are doing a pilot to test core feature functions and our operational capabilities in customer care and compliance, David Marcus, the head of Facebook Financial, tweeted on Tuesday. We re also hopeful that this will demonstrate a new Stablecoin usage case as a payment instrument beyond how they are normally used today. We believe that to be added, every company in the future will become a crypto corporation, including fintech platforms, banks, social media, gaming companies and consumer brands, Coinbase added. Initially, our goal was to arm the participants with the best tools possible so that their own users can have a first-class experience and participate in cryptoeconomy. Though Facebook says it chose USDP due to its important regulatory and consumer protection attributes and reserves that are 100% held by the U.S. dollar and fully backed in cash and cash equivalents, the company emphasizes that it plans to eventually migrate Novi to its own stablecoin, Diem.
We see great value in the way Indare is designed with robust protections for consumers and controls to combat financial crime, Facebook said. The goal for Novi has been and always will be to be interoperable with other digital wallets and we believe a purpose-built blockchain for payments, such as Diem, is crucial to address the issues people experience with the current system of payments. Diem, which was first released under the name Libra in 2019 for the first time, has faced intense scrutiny from regulators. The stablecoin is still in the process of approval by the regulator.
Shares of Coinbase jumped nearly 5% in the trading session following Tuesday announcement.