Facebook will launch cryptocurrency wallet (even without Diem)
by Chiara Rossi
Facebook may launch its cryptocurrency wallet before its Diem digital currency is ready. All the details
At first Facebook’s cryptocurrency was supposed to be Libra, then it became Diem and its Calibra wallet is now called Novi.
And Facebook’s cryptocurrency wallet is ready, even if its currency (Diem) is not yet available.
But the digital currency promptly sparked fears from central bankers and politicians worried that it could undermine sovereign currencies such as the dollar, allow money laundering, and violate user privacy.
The Libra organization has since lost several key supporters, including Visa, Mastercard and PayPal. After much regulatory opposition, the group, now named Diem, has therefore shifted its focus to multiple “stablecoins” backed by different currencies, as well as a multi-currency coin.
And already this year Facebook could launch a digital wallet that would allow users to store cryptocurrencies as well. To say this, in an interview with Bloomberg Television, was David Marcus, head of the Facebook Financial division, who explained that he wanted to launch Novi – this is the name of the wallet – together with the cryptocurrency of the group, Diem, whose timing of release is however uncertain. (Here is the message launched by Cristian Catalini, chief economist of Diem speaking in July at the first RegEvent (Regulatory Event) organized by Mediobanca).
All the details.
THE PORTFOLIO READY BEFORE THE DIEM CURRENCY
Via a blog post earlier this month, Facebook Financial chief David Marcus had already confirmed that Novi is ready to enter the market.
Marcus said Facebook has secured the necessary licenses or approvals to launch Novi in nearly every state in the US, but added that “we will not launch where we have not yet received such permissions.”
“In theory, Novi could arrive before Diem, but that would mean launching it without our cryptocurrency and this is not necessarily something we want,” he later explained in an interview with Bloomberg.
“It all depends on how long it will take for Diem to be available,” he concluded.
HOW NOVI WORKS
Originally called Calibra, Novi represents half of Facebook’s overall crypto strategy. Like other blockchain-based digital wallet projects, it will allow users to send money around the world without third party supervision.
“We believe it is unreasonable to delay delivering the benefits of cheaper, more interoperable and more accessible digital payments,” explained Marcus.
Even so, Facebook hopes Novi will be used to reduce transaction costs and make cross-border payments more efficient.
As for bitcoin, Marcus specified that he does not consider the leading cryptocurrency as a good medium of exchange. However, he added that it is a “truly exceptional” investment asset. “If you send money around the world, you can’t decrease the value of the asset you send by 20% in one day or by 10% in one day. This is volatility that is actually inappropriate for payments, ”said the head of Facebook Financial. “Maybe someday, but not now.”
WHAT POINT IS DIEM
So the Facebook cryptocurrency wallet is ready, even without the Diem currency.
Since the announcement of the Libra digital currency project in 2019, Facebook’s efforts in the crypto space have remained as controversial as they are ephemeral.
Although this token was originally set up to be backed by a wallet of fiat currencies, Facebook has since backtracked. For now, Diem is only planning to issue a US dollar-backed stablecoin, called Diem Usd. Unlike bitcoin, which uses a public accounting system and is not controlled by any single authority, Diem’s technology will only be open to a few participants, such as Facebook and other members of the Diem Association.
Stablecoins are also designed to avoid the price volatility seen in cryptocurrencies such as bitcoin.
“The project you see today is totally different from the one we started from,” Catalini pointed out at the Mediobanca event last month. Interviewed by Andrea Filtri, Mediobanca’s co-head of equity research and expert in digital currencies, Catalini defined the collaboration with central banks on the subject of digital currencies as a real “promise”, offering Diem’s technology to implement a lot faster central bank digital currencies (so-called CBDCs) such as the digital euro. This would help quickly bridge the temporary and technological gap of Western central banks with China, the first major country ready to issue central bank public currency.