Facebook is prepared to launch the Novi digital wallet tied to Diem blockchain-based payment system, said the head of the social media giant’s payments project that’s seeking necessary regulatory clearances.
David Marcus, chief of Facebook’s financial services division, in a blog post Wednesday said Novi could play an instrumental role in fixing the global payments system that he said is, among other things, too slow and too costly.
“Change is long overdue. It’ll happen one way or another. Novi is ready to come to market,” wrote Marcus, a former Paypal president and co-founder of the Diem Association. “We feel that it’s unreasonable to delay delivering the benefits of cheaper, interoperable, more accessible digital payments.”
The Diem Association is a nonprofit consortium overseeing the development of the diem stablecoin. Stablecoins are digital currencies that are pegged to a fiat currency, or a currency issued by a central bank. Novi is designed to allow users to add money to their wallets that would be converted to a Diem digital currency that could then be sent to others worldwide.
Diem, which was first spearheaded by Facebook under the Libra name, is a blockchain-based payment system that has faced a number of roadblocks . Regulatory concerns over Facebook’s data privacy and potential money laundering issues have contributed to delays for the program that was meant to launch in early 2021.
Diem was originally meant to be backed by a wide mix of currencies and government debt but it’s now meant to launch as a single coin backed by the US dollar.
“Let me be clear, if we only offered fiat money in Novi, it would bring people a lot of value,” wrote Marcus, saying it could offer domestic and cross-border payments and it would benefit Facebook as the company would create a significant number of wallet accounts.
“So why not just do that and call it a day? Well, we might. But before we do, I strongly believe if there was ever a chance to create an open, interoperable protocol for money on the internet and truly change the game for people and businesses around the world, it is now.”
Facebook is already “an actor” in the payments industry, said Marcus. Facebook Payments has enabled more than $100 billion in payments volume in the last four quarters and is used in more than 160 countries for payments in 55 currencies, he wrote.
Novi has secured licenses or approvals in nearly every US state and it won’t launch any place where it has yet to receive clearances, said Marcus.
He said the Diem Association is engaged in dialogue with US and global regulators. “It has addressed every legitimate concern that was raised on its journey to design and build a high quality stablecoin with extensive consumer protections, and a highly compliant payments network to support it – all within the US regulatory perimeter.”