This week, Facebook launched its new digital wallet for cryptocurrencies called Novi. The social media giant hired Coinbase to help with the logistics. Its shares rose 3.6% on early Tuesday to reach $303.78. Shares of Facebook advanced 1.32% to $339.70.
Novi will allow customers to convert local currencies into crypto via a stand-alone app that plugs into other Facebook products such as Instagram. The cryptocurrency exchange Coinbase will store funds within its custody trust company. It manages around $180 billion of crypto assets and is regulated by the New York Department of Financial Services.
Facebook will launch a small pilot project, using the stablecoin Paxos Dollar, in both the U.S. as well as Guatemala. Users will be able to buy Pax through their Novi accounts. Thanks to this project, people will be able to send and receive money abroad instantly, securely and with no fees.
Facebook’s decision to hire Coinbase is a huge achievement for the country’s largest cryptocurrency exchange. Nevertheless, it is not a surprise, given there currently are not a lot of options out there for crypto custody.
As previously mentioned, Coinbase is a very successful cryptocurrency exchange. In the second quarter, retail monthly transacting users, a key metric in tracking sustainable growth, was up 44% from the first quarter. Currently, more than 9,000 institutional clients are using its crypto platform.
People will deal in the Paxos Dollar, or USDP. Its current CoinMarketCap is #100, is pegged to the price of the U.S. dollar. Another stablecoin pegged to the dollar USDC, ranks in the top ten, based on its market capitalization.
The social media giant picked USDP so that the company could test their systems with a stablecoin that operates for several years. The company said it ultimately plans to migrate Novi to a coin that backs Diem once it receives regulatory approval.
Facebook was working on Novi for a long period of time, though it went by a different name back in 2019. It initially announced the digital wallet initiative in connection with its Libra stablecoin.
In 2021, Facebook moved its Diem project originally known as Libra from Switzerland to the U.S. It also unveiled a partnership with Silvergate Capital Corp. to launch a new stablecoin before the end of 2021.
Get the latest economy news, trading news, and Forex news on Finance Brokerage. Check out our comprehensive trading education and list of best Forex brokers list here. If you are interested in following the latest news on the topic, please follow Finance Brokerage on Google News.