[Asia Economy Reporter Kwon Jaehee] Facebook, the world's largest social media (SNS) company, has pilot-launched the virtual currency digital wallet 'Novi' in the United States.
According to CNBC on the 19th (local time), Facebook announced that it began pilot operations of the digital wallet Novi in the United States and Guatemala on the same day.
Users can download the Novi application (app) on iPhone or Android smartphones and register with a government-issued ID to send or receive virtual currency to or from overseas Novi users free of charge.
The transactions use 'Paxos Dollar (USDP),' a stablecoin pegged to the value of the dollar to stabilize the price.
Major foreign media pointed out that Facebook's decision to use an existing stablecoin instead of its originally planned proprietary virtual currency 'Diem' reflects the difficulties Diem is facing.
Although the virtual currency market as a whole is engulfed in doubts regarding consumer protection, money laundering, and currency stability, regulatory authorities are particularly concerned about Facebook, which has frequently caused controversies, operating its own currency, foreign media analyzed.
David Marcus, CEO of Facebook Financial, stated, "If Diem receives regulatory approval, we intend to switch Novi to the Diem payment network."
CEO Marcus added that Novi plans to be compatible with other digital wallets in the future.
According to the cryptocurrency information site CoinGecko, Paxos Dollar ranks eighth in market capitalization among stablecoins, but its share in the $130 billion stablecoin market is less than 1%.
Facebook explained that it chose Paxos to test the system with a stablecoin that has been successfully operated for more than three years. They also cited that this virtual currency meets regulatory and consumer protection standards, and that its reserves are 100% cash or cash equivalents, allowing users to easily redeem it for local currency.
Coinbase, the largest cryptocurrency exchange in the United States, was selected as the custody service partner to securely store and manage the virtual currency traded on Novi.
In 2019, Facebook announced plans to introduce its own virtual currency 'Libra' to enable low-fee money transfers and payments for goods and services. However, as regulatory authorities worldwide, including the United States, raised concerns, the project was cornered, and during this process, the name was changed to Diem.
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