Is Paxos the new Diem?

Facebook’s controversial Novi stablecoin wallet has just debuted on WhatsApp, the Facebook-owned messaging service with 2 billion customers.

The ability to send stable payments through WhatsApp, the world’s largest messaging service, is limited to certain US customers, not New Yorkers, for example.

The social media giant now known as Meta sparked global outrage two years ago when its plan to allow customers to make payments through a dollar-linked cryptocurrency called Libra – since renamed Diem. and well at a standstill – which frightened central bankers, political and financial leaders. regulators around the world with visions of a global currency that could dominate their national fiat currencies and destabilize the global financial order.

Read more: House lawmakers call Libra a dangerous threat

In a December 8 Twitter announcement, Novi’s new leader, Stéphane Kasriel, said: “We often hear that people are using WhatsApp to coordinate sending money to their loved ones, and Novi allows people to do it securely, instantly and without costs “.

Payments, he added, will show up directly in people’s chat rooms.

The Novi wallet uses the Pax Dollar (USDP) of the highly regulated company Paxos, the seventh largest stablecoin, with a market cap of around $ 950 million. The two largest stablecoins, tether and USD coin, have market caps of $ 76 billion and $ 42 billion, respectively.

Novi transactions will be instant, free, and will not affect WhatsApp’s end-to-end encryption, the company said on Novi’s website.

They will also require users to provide government issued photo ID cards and, in some cases, video selfies. Besides account security, this will allow WhatsApp to ensure that the transaction complies with international anti-money laundering (AML) laws.

Along with anti-fraud monitoring and two-factor authentication, WhatsApp’s Novi / Paxos transactions will offer something new to the crypto world: a “full refund for unauthorized transactions.”

Since blockchain transactions are immutable – unchangeable and therefore irreversible – and money can be added to Novi wallets by debit card, this will inevitably require some sort of insurance from Meta.

Hurry up

The announcement comes following a small-scale six-week trial in Guatemala and the United States. to make them even better, ”Kasriel said.

Kasriel replaces David Marcus, who announced his intention to step down as head of Novi and Meta’s FinTech division on November 30, citing the boost in his “entrepreneurial DNA”. He will be leaving at the end of the year.

See: David Marcus leaves Facebook, with last vestige of Libra’s battered brand

In a Facebook post, Marcus called the WhatsApp rollout “another small step in the right direction” and “the best farewell gift from the best team ever.”

Unsaid but probably a factor is Marcus’ refusal to be the whip again of finance ministries, international financial organizations and regulators as Mark Zuckerberg seeks to pass stablecoins of a tool used primarily by financial institutions. bitcoin and cryptocurrency traders to a local currency usable anywhere from Australia to Zimbabwe.

Also read: Facebook continues Libra push despite major setbacks

Under fierce political attack, Marcus led the withdrawal of Libra as a global stable coin backed by a single basket of many currencies, including the dollar and the euro, to Diem, a series of national stable coins. backed by local currencies.

Break things

There hasn’t been much outcry yet, but it’s likely there will be.

The announcement came a day after Representative Maxine Waters (D-Cal.), The chair of the House Financial Services Committee, criticized the Paxos CEO for bringing his Pax Dollar stablecoin to Facebook’s Novi digital wallet during the ‘a hearing on “digital assets and the future of finance.

Read here: Scenes from the five-hour congressional crypto hearing

Representative Waters directed the first question of a four-hour question-and-answer session to Paxos CEO Charles Cascarilla, saying, “I’m a little concerned about your business. Paxos’ partnership with Facebook, which is now called Meta. As you know, Facebook made several attempts to enter the cryptocurrency market starting in 2019. ”

Citing political opposition to the project then and today, Representative Waters added: “Now, in partnership with Paxos, Facebook has launched a pilot project with this Novi digital wallet. What is preventing Facebook in the future from allowing its nearly 3 billion monthly active users to make payments and save funds with a Pax dollar or other previously issued stablecoin through a Novi wallet? ? “

Well, nothing, it seems.



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