With Novi, Facebook hopes to address some of the challenges posed by current international payment systems. Ultimately, the digital wallet intends to help people securely send and receive money abroad instantaneously, without fees.
The purpose of the pilot project will be to test the operational capabilities of Novi systems, according to the head of the project, David Marcus. Besides core features functions, these also include their compliance program and customer care response.
For the pilot, project leaders chose to work with Paxos and use their Pax Dollar (USDP) because it has been operating successfully for over three years. Additionally, they feel that it has important regulatory and consumer protection attributes. As a stablecoin, USDP reserves are fully backed by the US dollar and are held 100% in cash and cash equivalents.
Users will be able to upload funds through their debits cards into USDP, one of which will equate to USD $1. They can then keep the money in their Novi balance, withdraw it as cash at a nearby location, or transfer it to their bank account. Users can then also send the USDP to another Novi wallet holder, who can then withdraw the money in their local currency. Following the pilot phase, Novi will migrate to the Diem payment network and become fully interoperable with other crypto wallets.
Meanwhile, Coinbase will support the Novi pilot through Coinbase Custody, according to the company’s blog. Coinbase Custody is a crypto-native platform and custodian which manages $180 billion in crypto assets, as of June this year. Coinbase’s custody service offers a proprietary, fully segregated cold storage capability for managing private keys. Novi users also benefit from Coinbase Custody’s leading insurance program, which includes a $320 million commercial crime policy.
Users who participate in the Novi pilot could receive some Pax Dollar (USDP) stablecoin through their account. This will be held on deposit within Coinbase Custody Trust Company, a New York limited purpose trust company, and qualified custodian. Regulated by the New York Department of Financial Services, Coinbase Custody Trust Company is a fiduciary under New York state banking law.
