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Is it possible for Facebook’s Metaverse to take over the Crypto Space?
The Crypto world is in an unstable state. However, amid cryptocurrencies’ value going down and investors are still confused and panicking, Facebook announced the launch of its crypto in 2021.
Was this a clear sign that Facebook Meta can take over the crypto space?
Why Metaverse Decided to Launch Novi Digital Wallet?
In October 2021, Facebook rolled out its digital wallet, Novi in Guatemala and also in the US 2 years after announcing it. This “small pilot program”, allows users to send and receive money securely and instantly without any fees to pay through Paxos stablecoin and in partnership with Coinbase.
Facebook’s attempt to enter once again into the crypto industry emerged right after its name was changed to Meta; They launched Novi.
In the past Facebook has already attempted its crypto formerly known as the Libra coin in 2019. A separate company was built for that and was formerly called the Libra Association. However, things did not go smoothly because the leaders of the company had different plans and goals for where the coin is heading. That’s why it went through a rebranding and several changes. Libra coin was then now referred to as Diem.
When Libra was introduced it faced a lot of criticism. Multiple major partners like Paypal, Visa, Mastercard, Mercado Pago, Stripe, and eBay started to pull out only a few months after it was announced. Then, the company pulled out its operation back to the US. When they launch Novi, they did not include Diem yet even if it is the major cornerstone of the project. The core reason is that it is still working on its regulatory approval and placements to any country.
David Marcus, the Head of F2 or Facebook Financial said that the “small pilot program” was to test the core functions and operational capabilities in customer care and compliance. And that Novi is still committed to Diem despite initially partnering with Coinbase.
People thought that there is a great probability that if the virtual world that Meta envisions comes to life, the Novi, would potentially be the most used coin in the world. Because if we take a look at the largest cryptocurrency right now, Bitcoin, it has only 400 Million users and 25% only actually own it. Facebook on the other hand has more than 2.5 Billion active users and that number is not slowing down. Even if only half of the active users from 2.5 Billion agree and give Meta a go, Novi will become the largest crypto with twice the user base.
But, this 2022, Meta plans to fully shut down Novi on September 1. They are dropping the plans for digital wallets. It’s been just eleven (11) months since they debuted it. If you visit the Novi website there’s a message that “Novi is ending soon.” They are encouraging their users to withdraw all remaining balances and download their Novi information.
The remaining balance can be withdrawn through bank transfer or removed as cash where it is applicable. Come September 1, users can no longer access and retrieve their information, even their transactions.
What Happened to Meta’s Novi Digital Wallet?
When Meta launched Novi in October 2021 in a testing version, they had used the help of the cryptocurrency Coinbase. It acted as the custody partner. Coinbase provided digital storage and security for people’s funds.
Meta announced Novi as a convenient way to send and receive money through Paxos Dollar, USDP, and stablecoin. And then, Meta at some point planned to issue the Diem cryptocurrency that is backed by the Facebook-led Association.
However, Diem cryptocurrency faced enormous scrutiny from regulators which soon led to its end. As a matter of fact, the company’s assets were sold. All intellectual properties and Diem-associated assets were bought from Diem Association by a crypto-focused company, Silvergate Bank.
In a statement from Diem CEO Stuart Levey, “Despite positive substantive feedback on the design of the network, it nevertheless became clear from our dialogue with federal regulators that the project could not move ahead. As a result, the best path forward was to sell the Diem Group’s assets as we have today to Silvergate.”
What is the Reason Behind Metaverse Reversing Crypto Ad Ban?
The long-standing policy of Facebook that refrained cryptocurrency companies from running their ads on Facebook has ended. In a report, after Meta failed to successfully launch Novi, which supposedly brings ease for users to send and receive money online, they have lifted their Ad-ban for cryptocurrency companies.
In a statement released by Facebook, they stated that the reason behind the ads ban for cryptocurrencies is to protect their users from the spread of false information. It also intends to prevent its users from being scammed by false and deceitful cryptocurrency deals.
With this policy lifted, more opportunities for small retail investors to access the cryptocurrency world are easier than ever before. Meta might be unsuccessful in launching its crypto, but this move could help with the ongoing stress and situation in the crypto space.