There was no official announcement.
And even if there had been, this announcement would have gone unnoticed: Mark and Zuckerberg and his company Meta Platforms (META) – Get Meta Platforms Inc. Report, no longer have digital payment project.
Zuckerberg has chosen his moment well: The crypto industry is currently going through an unprecedented crisis of confidence, which is characterized by a drop in the price of digital currencies. Bitcoin, the king of cryptocurrencies, has lost 71.3% of its value since its all-time high on Nov. 10, according to data from CoinGecko. Ether, the second largest cryptocurrency by market value, is also down 78% from its all-time high in November. Overall, the crypto market has lost over $2.1 trillion in eight months.
In addition to falling cryptocurrency prices, attention is focused on the liquidity crisis currently affecting many prominent crypto firms. In fact, the collapse of sister tokens Luna and UST in May just caused the bankruptcy of hedge fund Three Arrows, which had borrowed large sums of money from a variety of crypto lenders such as Voyager Digital (VYGVF) – Get Voyager Digital Ltd Report, Babel Finance and BlockFi to invest in Luna. Given the default of Three Arrows Capital or 3AC, these companies are currently in serious financial difficulties and some have had to suspend their payouts. Basically, their customers no longer have access to their money.
Novi will be closed on September 1st
In this context, Zuckerberg and Meta, the parent company of Facebook, Instagram and WhatsApp, Novi are leaving their service, which was supposed to allow people to send money to each other using a cryptocurrency.
The announcement was made on the website dedicated to Novi.
“The Novi pilot will end soon,” the company wrote. “Novi will no longer be available after September 1st.”
“Before Novi disappears, we’ve made it easy for you to check your remaining balance and download your Novi information.”
The social media giant then explains to users how to withdraw their funds before the curtain finally falls on Novi.
“It is important that you withdraw the remaining balance on your Novi account before this date. You can transfer your Novi balance to your bank account or withdraw it in cash if necessary.”
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It warned: “After September 1, 2022, you will no longer be able to log into your Novi account and you will lose access to this information.”
Facebook launched Novi last October with the help of cryptocurrency exchange Coinbase (COIN) – Coinbase Global Inc Report received in beta form, a kind of test, which should then be extended. Coinbase brought with it some sort of digital storage and technology to secure user funds.
“Facebook has selected Coinbase as its custody partner for its pilot of Novi, a new digital wallet that will allow people to send and receive money internationally, instantly, securely and with no fees,” Coinbase said in a blog post last October.
How it worked: Novi’s ambition was to allow users to send each other money through an app or through Facebook Messenger and WhatsApp using the Pax Dollar (USDP), a stablecoin whose value is pegged to the dollar. Basically, one USDP equals one dollar. There is no volatility.
“Novi users eligible to participate in the pilot can purchase Pax Dollars (USDP) through their Novi account, which Novi will place on Coinbase Custody. Novi users can transfer USDP to each other instantly,” the company explained.
Facebook initially planned to issue and accept Diem/Libra, a stablecoin the company wanted to create with a group of financial institutions, but Diem/Libra faced opposition from regulators who feared it would disrupt the financial system. Regulators also feared that Diem/Libra would become a money laundering tool and a competitor to fiat currencies such as the dollar. The outcry prompted Facebook to abandon Diem/Libra altogether in January.
“Although we received positive substantive feedback on the design of the network, it was clear from our dialogue with federal agencies that the project could not move forward,” Diem CEO Stuart Levey wrote in a statement Jan. 31. The best way forward was to sell the Diem Group assets, as we did today to Silvergate” (S.I) – Get Silvergate Capital Corporation Class A Report, a crypto focused company.
Novi’s abandonment seems to bury Meta’s ambitions regarding cryptocurrencies, but the company is still working on a potential virtual currency that would be used in the Metaverse, according to the Financial Times. The Metaverse is a virtual world where we are asked to interact with our avatars and through objects. Technologies such as virtual reality headsets.
“We have informed Novi pilot participants that we are ending the pilot program at this time,” a Meta spokesman said in an emailed statement to TheStreet. “We will bring the technology we have developed and what we have learned from the program to future products across the business as we focus on building for the Metaverse.”
“We’re already leveraging the years we’ve spent building capabilities for Meta overall on blockchain and introducing new products like digital collectibles. You can expect to see more of us in the Web3 space because we are very optimistic about what these technologies can bring to people and businesses in the Metaverse.”