Social media giant Facebook has turned to Coinbase and Paxos for its next digital wallet project Novi, which began its pilot testing phase in the United States and Guatemala on Tuesday.
Starting October 19, a small cohort of users in both countries will be able to download the Novi digital wallet app on iPhone or Android devices and add money to their accounts with a debit card. From there, they will be able to send and receive money using Pax Dollar (USDP), a dollar-backed stablecoin issued by blockchain trust company Paxos.
Facebook selected USDP in its pilot program because of its proven track record and "important consumer protection and regulatory attributes." Because the USDP reserves are fully backed by cash, Novi users will be able to withdraw their money in their local currency.
Client funds will be guarded by Coinbase, which manages $ 180 billion in assets.
A Facebook spokesperson told Cointelegraph that the pilot phase will allow Facebook to assess the wallet's core functions and showcase operational capabilities, specifically around customer service and compliance. Novi is also being designed for interoperability with other digital wallets.
The spokesperson also stated that the company has not abandoned support for the Red Diem, a permissionless payment system still waiting for the green light from Washington. "We intend to launch Novi with Diem once it receives regulatory approval and goes live," they said.
Related: One coin to rule them all: Facebook's Diem has global ambitions
Despite significant lobbying powers in Washington, Facebook has run into obstacles in convincing top policy makers to pass Diem. The proposed payment network has gone through several design iterations since 2019, but concerns about money laundering and stablecoins have slowed down the approval process. As Cointelegraph reported in September, policy makers have been encouraged for some of the design changes.
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