Facebook’s Crypto-Based Payment System Novi Draws Skepticism

In another major stride forward in the normalization of cryptocurrency-driven payments, Facebook has announced its plans to launch Novi, a digital wallet that will give its platforms’ users the ability to send or receive money in the form of the “stablecoin” known as Diem. David Marcus, the head of Facebook Financial, asserts that Novi will help Facebook lend assistance to the world’s unbanked population.

Of course, fintech experts have been quick to point out that this is not Facebook’s first foray into crypto. The company announced plans for a similar scheme in 2019 before regulatory alarm bells sounded and the project was tabled. Though some of the issues related to Facebook’s previous crypto concept have been amended in the form of Novi, it has been claimed that running this payment platform through a permissioned blockchain actually does little to address the privacy or convenience concerns that Navi is ostensibly being launched to fix.

Become a Subscriber

Please purchase a subscription to continue reading this article.

Subscribe Now

Faced with these less-than-reassuring issues, it’s small wonder that Facebook is distancing itself as much as possible from Diem, even as it plans to launch Novi onto Facebook Messenger and WhatsApp relatively soon. As pointed out by Lee Reiners, executive director of Duke University’s Global Financial Markets Center, Facebook has been taking “great pains to point out that Diem is run by the Diem Association,” apparently in an effort to deflect any criticism that may arise. The Diem Association was until recently known as the Libra Association, and Facebook remains a member of the organization.