Sebastian Sinclair

<div id="highlights-block_61f20829d7753" class="highlights">
 <ul>
 <li>The Diem Association is reportedly selling off its crypto infrastructure for a sum of $200M</li>
 <li>A holding company for crypto-focused bank Silvergate has picked up the ticket</li>
 </ul>
 
</div>



Facebook&#8217;s brief foray into crypto is reportedly coming to a close.



According to a report by the <a href="https://www.wsj.com/articles/facebooks-cryptocurrency-venture-to-wind-down-sell-assets-11643248799" target="_blank" rel="noreferrer noopener">Wall Street Journal</a> on Wednesday, the Facebook-led Diem Association&#8217;s blockchain and crypto infrastructure is being sold off to a Californian bank for around $200 million. 



Facebook, now known as Meta Platforms Inc., did not immediately respond to Blockworks&#8217; request for comment.



The bank, Silvergate Capital Corp., previously reached a deal with Diem to issue the association&#8217;s stablecoin, but those efforts were blocked by the Federal Reserve, <a href="https://www.bloomberg.com/news/articles/2022-01-25/zuckerberg-s-stablecoin-ambitions-unravel-with-diem-sale-talks?sref=ctSjKj2N" target="_blank" rel="noreferrer noopener">according to Bloomberg</a> reporting. 



Silvergate Capital is a holding company for its crypto-focused bank which provides financial infrastructure and services to digital asset participants.



The move is viewed as a means to return capital to its investor members. Facebook parent Meta Platforms Inc. owns around a third of the association, according to the reports. The other two-thirds belong to a consortium of the association&#8217;s members.



From the outset, the Diem project formerly known as Libra was derided and railed against over its plans to introduce a stablecoin — a crypto asset generally pegged to a commodity or fiat currency — to billions of users worldwide.



Meta unveiled the ambitious project back in June 2019, much to the chagrin of US regulators and politicians. The association was formed alongside payments giants PayPal, Stripe and Visa and also included a long list of some of the world&#8217;s largest companies.



Concerns were raised in Washington a month later when Facebook&#8217;s CEO, Mark Zuckerberg, had to explain to congress how the initiative wouldn&#8217;t undermine global finance. Following funding cuts to the project, as well as the Meta-owned Novi crypto wallet and regulatory pressure, development stalled.



Meanwhile, David Marcus, who oversaw Libra from the beginning as well as the development of Novi, quit Facebook in December citing a need to pursue his own personal projects.


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Facebook-led Crypto Project Diem to Be Sold Off for $200M: Report

Macauley Peterson

<div id="highlights-block_61b238ca728fe" class="highlights">
 <ul>
 <li>Novi’s first pilot program, launched in October 2021, allowed payments between select US states and Guatemala</li>
 <li>The Novi wallet was originally called Calibra, under Facebook’s Libra stablecoin project, which Facebook rebranded Libra to Diem in December 2020, before rebranding itself to Meta in October 2021</li>
 </ul>
 
</div>



Select US users can now use WhatsApp to send payments in US dollar stablecoins, via a new pilot program from Novi, the digital wallet started by Facebook (<a href="https://cms.blockworks.co/zuckerberg-says-facebooks-new-name-will-be-meta/" target="_blank" rel="noreferrer noopener">now Meta</a>). 



Novi aims to bring affordable financial services to billions of unbanked people worldwide by allowing them to send and receive money across borders quickly and at low cost using mobile phones.



Vice President of Product at Novi, <a href="https://twitter.com/skasriel/status/1468722859648307201" target="_blank" rel="noreferrer noopener">Stephane Kasriel</a>, and Head of WhatsApp <a href="https://twitter.com/wcathcart/status/1468724981886427138?s=20" target="_blank" rel="noreferrer noopener">Will Cathcart</a>, each announced on Dec. 8 on Twitter that the wallet was beginning to roll out on the popular messaging app, which Facebook <a href="https://money.cnn.com/2014/02/19/technology/social/facebook-whatsapp/" target="_blank" rel="noreferrer noopener">bought</a> in 2014 for $16 billion in cash and stock.



Unlike the first Novi pilot program <a href="https://cms.blockworks.co/facebook-likes-coinbase-custody-for-digital-wallet-pilot-program/" target="_blank" rel="noreferrer noopener">launched on Oct. 19</a>, which allowed payments between the US and Guatemala using a separate Novi app, the WhatsApp pilot is only within the US.



Both projects employ Coinbase custody services and enable payments to be made using the USDP stablecoin issued by <a href="https://cms.blockworks.co/?s=paxos" target="_blank" rel="noreferrer noopener">Paxos</a>. Chad Cascarilla, CEO of Paxos was one of six executives <a href="https://cms.blockworks.co/crypto-industry-will-move-offshore-if-congress-doesnt-act-executives-warn/">testifyi</a><a href="https://cms.blockworks.co/crypto-industry-will-move-offshore-if-congress-doesnt-act-executives-warn/" target="_blank" rel="noreferrer noopener">n</a><a href="https://cms.blockworks.co/crypto-industry-will-move-offshore-if-congress-doesnt-act-executives-warn/">g before Congress yesterday</a>, and the company has made efforts to operate within the bounds of regulatory oversight, including by <a href="https://cms.blockworks.co/paxos-gets-occ-approval-for-a-bank-charter/" target="_blank" rel="noreferrer noopener">obtaining a banking charter</a> from the US Office of the Comptroller of the Currency (OCC).



Absent from the new pilot is Meta’s own planned Diem stablecoin. Diem has been the target of <a href="https://cms.blockworks.co/facebook-we-can-rebuild-the-broken-payments-system/">pronounced regulato</a><a href="https://cms.blockworks.co/facebook-we-can-rebuild-the-broken-payments-system/" target="_blank" rel="noreferrer noopener">r</a><a href="https://cms.blockworks.co/facebook-we-can-rebuild-the-broken-payments-system/">y scrutiny</a> since Facebook first unveiled its predecessor Libra <a href="https://www.theverge.com/2019/6/26/18716326/facebook-libra-cryptocurrency-blockchain-irs-starbucks" target="_blank" rel="noreferrer noopener">in 2019</a>. David Marcus, who headed Facebook’s financial services branch, was <a href="https://www.cnbc.com/2019/07/16/facebooks-david-marcus-testifies-before-the-senate-on-libra.html" target="_blank" rel="noreferrer noopener">called to testify</a> to members of Congress shortly after the original project was unveiled, and it has faced an uphill battle ever since.



Marcus, who <a href="https://cms.blockworks.co/facebook-parent-meta-reverses-crypto-ad-ban/" target="_blank" rel="noreferrer noopener">recently announced</a> his departure from Meta, <a href="https://twitter.com/davidmarcus/status/1468716985789796354?s=20" target="_blank" rel="noreferrer noopener">called</a> the new launch, “Another small step in the right direction,” and “The best farewell gift from the best team ever!”



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Another small step in the right direction. Today, we’re starting the rollout of the <a href="https://twitter.com/novi?ref_src=twsrc%5Etfw">@novi</a> wallet in <a href="https://twitter.com/WhatsApp?ref_src=twsrc%5Etfw">@WhatsApp</a> in the 🇺🇸. On a personal level, this is the best farewell gift from the best team ever! <a href="https://t.co/6jk4NO60wv">pic.twitter.com/6jk4NO60wv</a>&mdash; David Marcus (@davidmarcus) <a href="https://twitter.com/davidmarcus/status/1468716985789796354?ref_src=twsrc%5Etfw">December 8, 2021</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



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Meta’s Novi Wallet Debuts Payments in WhatsApp

Sam Reynolds

<div id="highlights-block_61a8aa42c5ec3" class="highlights">
 <ul>
 <li>As regulators provide more clarity on digital assets and licensure expands, Facebook once again is embracing this market</li>
 <li>Facebook&#8217;s Diem stablecoin project has stalled, but Meta is, as the name implies, going all in on the metaverse</li>
 </ul>
 
</div>



Meta announced Wednesday that Facebook has dramatically expanded its eligibility for digital assets advertising as the “cryptocurrency landscape has continued to mature”.



Cryptocurrency ads were virtually banned on the platform after January 2018 when the ICO bubble popped, leaving regulators scrambling and many retail investors underwater. Facebook did provide certain avenues for digital assets companies to run ads, but they needed to complete an extensive questionnaire that asked if they were publicly listed and what licenses they held — of which Facebook required one of three. Now that number has expanded to 27 as the market has “seen more government regulations that are setting clearer rules for their industry.” “Going forward, we will be moving away from using a variety of signals to confirm eligibility and instead requiring one of these 27 licenses,” Meta said <a href="https://www.facebook.com/business/news/expanding-eligibility-to-run-ads-about-cryptocurrency" target="_blank" rel="noreferrer noopener">in a blog post</a>.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“This change will help make our policy more equitable and transparent and allow for a greater number of advertisers, including small businesses, to use our tools and grow their business.”</blockquote>



Cryptocurrency continues to be an evolving space, and we may refine these rules over time as the industry changes, Meta noted in a post. The company said that it will consider adding eligible licenses to the list as they become available and reviewed by their compliance team.



All this comes as Meta considers its next move in the digital assets space, seemingly abandoning cryptocurrency for the Metaverse — as its name change implies. The company formerly known as Facebook seems to have dramatically scaled back its plans to launch a supra national digital currency. Its effort, formerly known as Libra and now as Diem, has yet to be released to the public. Initially, the currency was pegged to a basket of digital assets, but that has since <a href="https://cms.blockworks.co/facebook-led-digital-currency-pivots-to-us-dollar-stablecoin/" target="_blank" rel="noreferrer noopener">shifted to a US-dollar backed stablecoin</a>. Thus far, only the <a href="https://cms.blockworks.co/facebook-likes-coinbase-custody-for-digital-wallet-pilot-program/" target="_blank" rel="noreferrer noopener">digital wallet</a> has been released.  



David Marcus, who spearheaded Libra project, <a href="https://twitter.com/davidmarcus/status/1465740041339092994" target="_blank" rel="noreferrer noopener">announced recently</a> that he plans to leave the company at the end of the year, perhaps signalling a change in tempo for the company’s cryptocurrency — though not digital assets — efforts.



“While there’s still so much to do right on the heels of launching Novi — and I remain as passionate as ever about the need for change in our payments and financial systems — my entrepreneurial DNA has been nudging me for too many mornings in a row to continue ignoring it,” Marcus <a href="https://twitter.com/davidmarcus/status/1465740042215645194" target="_blank" rel="noreferrer noopener">tweeted</a>.



Meta’s stock closed the Wednesday trading day at $310, down 4% for the day.



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Facebook Parent Meta Reverses Crypto Ad Ban

Morgan Chittum

<div id="highlights-block_616ee08254e0b" class="highlights">
 <ul>
 <li>Coinbase managed roughly $180 billion worth of crypto assets on its platform as of June</li>
 <li>Coinbase (COIN) shares jumped 4% following the announcement; Facebook is up 1.25% on the day</li>
 </ul>
 
</div>



Facebook will soon store funds from its digital wallet, Novi, with the cryptocurrency custody arm of Coinbase, the company <a href="https://blog.coinbase.com/coinbase-to-power-crypto-custody-for-facebooks-novi-90dc8d3f5830" target="_blank" rel="noreferrer noopener">announced</a> on Tuesday. 



Novi, a Facebook subsidiary developing the wallet, will allow users to execute fast and free transfers of digital currency. The wallet was initially set to pair with Libra, the Facebook-initiated stablecoin project now dubbed Diem, but Novi scaled back its ambitions following withering criticism from financial regulators, Blockworks previously <a href="https://cms.blockworks.co/facebook-we-can-rebuild-the-broken-payments-system/" target="_blank" rel="noreferrer noopener">reported</a>.  



Novi <a href="https://twitter.com/novi/status/1450447507385950220?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1450447507385950220%7Ctwgr%5E%7Ctwcon%5Es1_c10&amp;ref_url=https%3A%2F%2Fwww.cnbc.com%2F2021%2F10%2F19%2Ffacebook-taps-coinbase-for-digital-wallet-novi.html" target="_blank" rel="noreferrer noopener">will go live</a> in the US and Guatemala in a smaller pilot program that will initially allow users to purchase the Paxos Dollar (USDP) instead of Diem. Wallet holders can then deposit their funds with Coinbase. Coinbase will provide custody services via its custody trust company, which currently manages roughly $180 billion in digital assets, according to data from June. 



“This does not mean our support for Diem has changed,” Facebook said in a press release.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“We intend to launch Novi with Diem once it receives regulatory approval and goes live.”</blockquote>



The custodian partnership comes as both multibillion-dollar tech companies have reportedly been venturing into the non-fungible token (NFT) space.&nbsp;&nbsp;



Coinbase <a href="https://cms.blockworks.co/coinbase-plans-to-launch-nft-marketplace/" target="_blank" rel="noreferrer noopener">announced </a>the upcoming launch of an NFT marketplace on Wednesday. The soon-to-be product allows users to purchase, mint, and trade the crypto assets on a peer-to-peer platform. More than <a href="https://www.nasdaq.com/articles/the-nft-market-is-already-centralized-2021-10-18" target="_blank" rel="noreferrer noopener">two million</a> people have joined the waitlist for Coinbase NFT marketplace.



Facebook’s Novi may be able to <a href="https://cms.blockworks.co/facebooks-novi-digital-wallet-could-support-nfts-in-future-exec-says/" target="_blank" rel="noreferrer noopener">support NFTs</a> in the future as well, allowing users to store them on the digital wallet, according to the company’s Financial Head, David Marcus. 



“We’re definitely looking at the number of ways to get involved in the [NFT} space because we think we’re in a really good position to do so,” Marcus said to <a href="https://www.bloomberg.com/news/articles/2021-08-24/facebook-fb-explores-nfts-as-part-of-novi-digital-wallet" target="_blank" rel="noreferrer noopener">Bloomberg</a> in August. Marcus hasn’t spoken publicly about the matter since. 



Coinbase Global Inc. (COIN) and Facebook Inc. (FB) shares are both up on Tuesday’s news, trading at $301.24 and $338.98, as of press time. COIN jumped 4% in less than an hour following the Tuesday morning announcement.&nbsp;



Facebook did not respond to Blockworks’ request for comment. Coinbase declined to comment further, and referred to their blog post.



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Facebook Likes Coinbase Custody for Digital Wallet Pilot Program

<div id="highlights-block_61267ab5ef5a0" class="highlights">
 <ul>
 <li>Novi could be used to store non-fungible tokens once the digital wallet goes live</li>
 <li>The wallet is intended to allow users to execute often-times free and quick money transfers</li>
 </ul>
 
</div>



Facebook Inc. is heavily considering adding non-fungible tokens (NFTs) into their soon-to-be launched digital wallet Novi, according to the company’s Financial Head David Marcus.



“We’re definitely looking at the number of ways to get involved in the [NFT} space because we think we’re in a really good position to do so,” Marcus said in an interview with <a href="https://www.bloomberg.com/news/articles/2021-08-24/facebook-fb-explores-nfts-as-part-of-novi-digital-wallet">Bloomberg</a> on Tuesday. However, Marcus added that it was still “too early to talk” publicly about plans to get involved in the space.



According to Marcus, Novi could be used as a way to store NFTs once the digital wallet goes live. &#8220;If you&#8217;re a creator and you&#8217;re creating your NFT, you may want to rent your NFT, you may want to sell your NFT. You&#8217;ll have to store your NFT,” he said.



Novi is intended to allow users to execute often-times free and quick money transfers. Originally, the crypto wallet was created to pair with Libra (now referred to as Diem) the Facebook-initiated stablecoin project, but ran into resistance from financial regulators. Facebook said the financial product is “ready now” but the social media network has been waiting to launch alongside Diem, their stablecoin project which would offer a coin backed by the US dollar.



Marcus has said in the past that Facebook’s financial service projects have undergone unfair resistance from financial regulators, according to a <a href="https://cms.blockworks.co/facebook-we-can-rebuild-the-broken-payments-system/">memo </a>released on August 18.



“I’ve repeatedly heard variations of the argument that the payments and financial services industry shouldn’t let Facebook be part of these innovations,” Marcus wrote in the memo. “I’ve heard multiple conversations about how this proposal would be so great if only Facebook wasn’t involved.” Marcus added that these financial products should be taken seriously.&nbsp;



<h3 class="wp-block-heading">Facebook’s venture into the metaverse</h3>



Talk of NFT adoption should come as no surprise after CEO Mark Zuckerberg’s recent comments about the company’s venture into the “metaverse.”



During Facebook’s <a href="https://www.cnbc.com/2021/07/29/facebook-metaverse-plans-to-make-money.html">earnings call</a> in July, Zuckerberg referred to the tech giant as a “metaverse company”, using the term approximately 20 times during the hour-long call. However, it was unclear how the CEO planned to profit from the digital world.



Overall, NFTs are quickly gaining popularity despite many holders not understanding the asset that they own, FTX’s Sam Bankman-Fried said in a recent <a href="https://www.cnbc.com/video/2021/08/24/non-fungible-tokens-are-going-completely-mainstream-says-ftx-ceo.html">interview with CNBC.</a>



&#8220;It&#8217;s almost going mainstream faster than the mainstream understands what it is they&#8217;re adopting, which is a weird phenomenon,&#8221; Bankman-Fried said. &#8220;It could lead to just incredibly fast and giant adoption. It could also lead, frankly, to sort of a sour taste in people&#8217;s mouth if there&#8217;s a crash, and no one ever quite figured out what it was.&#8221;



Want more investor-focused content on digital assets? <a target="_blank" href="https://cms.blockworks.co/events/digital-asset-summit-2021-2/" rel="noreferrer noopener">Join us</a> September 13th and 14th for the Digital Asset Summit (DAS) in NYC. Use code ARTICLE for $75 off your ticket. <a target="_blank" href="https://cms.blockworks.co/events/digital-asset-summit-2021-2/" rel="noreferrer noopener">Buy it now</a>.

Facebook’s Novi Digital Wallet Could Support NFTs in Future, Exec Says

Casey Wagner

<div id="highlights-block_611d2cd9fe2e8" class="highlights">
 <ul>
 <li>Facebook payments and stablecoin projects have been unfairly scrutinized, the head of Facebook Financial writes </li>
 <li>The tech giant says it will be at the forefront of revolutionizing the payments system </li>
 </ul>
 
</div>


<div id="highlights-block_611d2bd7fe2e5" class="highlights">
 
</div>



Facebook wants a ‘fair shot’ at rebuilding today’s broken payments system, according to David Marcus, head of the financial services branch of the technology company.&nbsp;



Facebook Payments, launched in 2009, has enabled more than $100 billion in payments volume, Marcus wrote in a <a href="https://medium.com/@davidmarcus/good-stablecoins-a-protocol-for-money-and-digital-wallets-the-formula-to-fix-our-broken-payment-f11f59fc92d7">memo Wednesday</a> about Facebook’s role in improving financial systems. The platform and Facebook’s other financial services projects, Marcus said, have faced unfair resistance from traditional financial players and regulators, but the company is ready to be taken seriously.&nbsp;



“I’ve repeatedly heard variations of the argument that the payments and financial services industry shouldn’t let Facebook be part of these innovations,” Marcus wrote. “I’ve heard multiple conversations about how this proposal would be so great if only Facebook wasn’t involved.”&nbsp;



The pushback Marcus refers to was largely centered around Novi, Facebook’s planned digital wallet that would allow for quick, and oftentimes free, money transfers. The tech giant intended to pair Novi with Facebook-initiated stablecoin project Libra, but ran into regulatory constraints. 



In 2019, former President Donald Trump said that Libra would lack “standing and dependability” and that stablecoins will never be recognized as ‘real’ currencies. European Central Bank board member Benoit Coeure also raised concerns in 2019 about Libra posing a threat to the US dollar supremacy.&nbsp;



The opposition has positioned the tech giant, with roughly 2.89 billion users as of the second quarter of 2021, as a dark horse, Marcus said.&nbsp;



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“One of the core tenets of our value system is the promise of a level playing field,” Marcus wrote. “This idea that any person or company bringing a solid solution to a problem will have a fair shot.”</blockquote>



Facebook rebranded the Libra project as Diem following the opposition. Diem is now overseen by the Diem Association, a nonprofit group looking to address government and regulatory concerns.&nbsp;



“I understand and accept the need for extra scrutiny due to our scale,” Marcus wrote.&nbsp;



<h3 class="wp-block-heading">The regulatory approach</h3>



In May 2021, <a href="https://cms.blockworks.co/facebook-led-digital-currency-pivots-to-us-dollar-stablecoin/" target="_blank" rel="noreferrer noopener">Facebook announced a partnership</a> with Silvergate Capital where the bank holding company will be the exclusive issuer of Diem USD stablecoin. The move is largely seen as a way to appeal to regulators, some say.&nbsp;



“Libra had a fair amount of pushback, and subsequent to that, Facebook decided to say, ‘okay, we&#8217;re going to go to the regulatory approach, we&#8217;re going to we&#8217;re going to do everything by the book, we&#8217;re going to go get whatever state money transfer licenses we need with Novi,’” said&nbsp; Michael Del Grosso, research analyst at Compass Point Research and Trading. “And with Diem, as opposed to going to a less regulated stablecoin issuer, we&#8217;re going to go through a member of the Federal Reserve of California, a state-chartered bank, which is Silvergate.”&nbsp;



Facebook is a “challenger” in the financial payments industry, Marcus said. The Novi wallet will allow users to send and receive US dollars, Euros and other fiat currencies free of charge.&nbsp;



“So why not just do that and call it a day?” he wrote. “Well, we might.”



But Facebook isn’t quite ready to give up on the incorporation of stablecoins, Marcus said. A closed payments system using only fiat currencies is &#8220;not going to cut it,” he wrote. 



A secure, well-designed stablecoin truly backed one-to-one by fiat currency, a feature many <a href="https://cms.blockworks.co/more-capital-flowed-into-stablecoins-than-muni-bonds-in-2021/" target="_blank" rel="noreferrer noopener">projects today lack</a>, would offer consumers stronger protection and options in payments, Marcus said.&nbsp;&nbsp;



Facebook is committed to reaching this goal while adhering to regulations. The Novi wallet has licenses or approvals in most US states, Marcus said. Additionally, he said, the Diem stablecoin project “has addressed every legitimate concern.”



“Change is long overdue. It’ll happen one way or another. Novi is ready to come to market,” Marcus wrote. “It’s regulated, and we’re confident in our operational ability to exceed the high standards of compliance that will be demanded of us.”&nbsp;



Marcus’ statement, Del Grosso said, reflects the work Facebook has done and wants to show regulators.&nbsp;



“Facebook is trying to appease the regulators by playing their game,” Del Grosso said. “And I think that that&#8217;s what David is saying in this post today. He&#8217;s saying that they have gone out, done their homework, and they deserve their place in the marketplace today.”&nbsp;



Want more investor-focused content on digital assets?&nbsp;<a target="_blank" href="https://cms.blockworks.co/events/digital-asset-summit-2021-2/" rel="noreferrer noopener">Join us</a>&nbsp;September 13th and 14th for the Digital Asset Summit (DAS) in NYC. Use code ARTICLE for $75 off your ticket.&nbsp;<a target="_blank" href="https://cms.blockworks.co/events/digital-asset-summit-2021-2/" rel="noreferrer noopener">Buy it now</a>.