Since the Libra project became Diem, to make people forget that Facebook is behind this stablecoin project, things are moving fast. This long journey of struggle, initiated in June 2019, could thus soon come to an end. After more than 2 years of fierce struggle with state regulatory bodies, the Novi wallet is in the starting blocks, according to its leader.
A slow, costly and out of breath banking system
The Novi digital wallet was originally launched under the name Calibra, when Facebook’s stablecoin project was still called Libra, not Diem as it is today.
In a publication released on August 18, David Marcus, the head of Facebook Financial and Novi, outlined his vision for stablecoins and their protocols to “fix a broken payment system.” According to the executive, there is an urgent need to act:
“The [payment] systems we have today are expensive, slow and not interconnected. There are still about 1.7 billion unbanked people in the world, and even more who are underserved (…) the situation for cross-border payments is dramatically bad, with high average costs (…) and long end-to-end settlement times of 3 days on average.”
The solution to this ageing system is obvious to David Marcus: the Novi wallet, which is intended to be interoperable and will allow money to be transferred nationally and internationally in a “fast and affordable” way.
A “well-designed” stablecoin, but which one?
This economic and financial revolution will therefore pass through stablecoins, but not just any stablecoin, warns the head of Facebook Financial, because according to him, “not all stablecoins are equal.”
“What defines a well-designed stablecoin is how its reserves are established and managed, the degree of transparency to consumers and regulators, and the consumer protections and compliance features offered by the issuer. A well-designed stablecoin – one that still holds 1:1 reserves in cash at U.S. banks and in very short-term Treasury bills… – arguably offers better consumer protections…”David Marcus
A scathing, barely concealed tackle to Tether’s USDT, the current main stablecoin of the US dollar in the cryptosphere? It certainly sounds like it. However, if you were expecting decentralization and resistance to censorship, you’ll have to pass. Judge for yourself!
“Built and configured the right way, stablecoins (…) place client due diligence at the center of their approach to compliance. And when a stablecoin’s controls are designed to work in tandem with the individual wallet controls that support them, the potential for more effective detection and reporting of illicit activity will outweigh the existing system that often post-processes transactions…”David Marcus
Yes, transactions should not be allowed to take place without Novi or a state (which can put pressure on the company) being able to decide to freeze transactions and portfolios for good (money laundering/terrorism) or very bad reasons. And that compliance is well underway according to the executive:
“In the U.S., we have obtained licenses or approvals for Novi in almost every state, and we will not launch a product where we have not yet received those approvals.”
David Marcus concludes his remarks by stating that “Novi is ready to enter the market,” without specifying any date or timeline for launch.
Disliked by the cryptosphere for their obvious centralization, contrary to the CypherPunk spirit, Diem and Novi also manage the feat of being very much disliked by the states as well. Even if the Novi wallet project, as a simple payment infrastructure, managed to show the regulators the ropes after long negotiations, the Diem stablecoin has a much harder time getting through. This is due to Facebook’s gigantic size, since the global scale of Mark Zuckerberg’s company makes countries fear a destabilization of their monetary system, while they already have enough on their plate with Bitcoin and crypto-currencies.