After Facebook introduced Novi on Tuesday, a new digital wallet for cryptocurrencies, it contacted Coinbase for a partnership. The tech giant approached Coinbase to seek its seek for logistics.
Post this, Coinbase’s shares saw a hike of 2% in the market. In addition, the bitcoin exchange revealed it would store the cryptocurrencies offered by Facebook to users to test the Novi wallet’s early version.
According to the statement, Novi will allow people to exchange money instantly, securely, and for free when it’s launched in the United States and Guatemala.
Coinbase Custody is protecting Novi’s assets with its cryptocurrency transaction software, which keeps money safe.
Although the agreement is a success for China’s largest cryptocurrency exchange, it isn’t a surprise because there aren’t many alternatives for crypto custody.
Users of the Novi digital currency will trade in the Paxos Dollar, a stablecoin linked to the value of the U.S. dollar. The stablecoin, which has a current CoinMarketCap ranking of #100, is pegged to the value of the U.S. dollar.
According to its market capitalization, USDC is ranked in the top ten among stablecoins pegged to the dollar.
Facebook announced that it chose USDP as a target for testing because the stablecoin has been operational for over three years and has shown to be successful.
The decision to list on USDP was also attributed to the fact that USDP “offers important regulatory and consumer protection characteristics,” as well as its “reserves are fully backed by the U.S. dollar and are held 100 percent in cash and cash equivalents.”
Facebook has said that it plans to move Novi to a coin it supports called Diem once regulatory clearance is obtained. The objective of Novi, according to Facebook, has always been interoperability with other digital wallets.
The idea for Novi has been in the works since 2019, but it was previously known as something else.
The digital wallet initiative was first revealed in connection with Facebook’s libra stablecoin, which has been opposed by regulators who wish to curtail the scope of the social network’s cryptocurrency ambitions.