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Cryptocurrency

Novi, Facebook digital wallet sirens regulatory warning

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Facebook launched on Tuesday its own digital wallet Novi to support decentralized currencies in collaboration with Coinbase and was faced with an urge from U.S. senators and lawmakers to cease the wallet’s pilot release, effective immediately. 

One notion Facebook’s six-hour outage proved to us: the magnitude of our reliance on just one company.

Facebook made a name for itself by continuously entering different playfields to strengthen users’ reliance on any platform.

Now, the social networking company’s act to work together with Coinbase to develop a new digital wallet is just an additional aspect that we did not take into consideration when Facebook was releasing its digital coin, Libra.

While some might say that Libra is a failed attempt at cryptocurrency, the networking platform’s collaboration with Coinbase shows that the Big Tech titan is hiding some cards in its sleeve, and this collab is just pushing it one step closer towards its goal of having a say or simply amplifying its presence in the decentralized market.

Novi, previously known as Calibra, is the tech mogul’s rebrand of its troubled digital wallet. Initially, Calibra was built for users to adopt as their go-to wallet to use and hold the company’s own digital currency, Libra, later rebranded as Diem.

Last year, Facebook announced that once launched to the public, Novi could be incorporated into messaging platforms WhatsApp and Messenger, in addition to being deployed as a stand-alone application.

Now, the Big Tech giant is initiating the first step into releasing its digital wallet to the public. In its early stages, it will run pilot programs in the U.S. and Guatemala, according to a letter from the networking company.

“Today we are starting to roll out a small pilot of the Novi digital wallet app in Guatemala and the U.S. The purpose of the pilot is for us to affirm our operational readiness and show that our Novi systems, such as our customers care response, compliance program, and core feature functions are serving customers well,” Facebook said.

While Facebook will provide availability on U.S. turf, however, Alaska, Nevada, New York, and the U.S. Virgin Islands will be excepted from the digital wallet’s enrolment, for undisclosed reasons.

So, how will Facebook’s partnership with Coinbase strengthen the wallet’s enrollment to the public?

Since Novi will allow users to transfer money internationally without any fees, the application/app extension will allow users to send a stablecoin pegged to the price of U.S. dollars (USDP) that can be withdrawn in a local currency.

And here is where Coinbase’s role sweeps in.

The cryptocurrency platform will weaponize Novi with its trademarked, completely isolated cold storage capacity to manage confidential keys, Coinbase Custody. With its deeply embedded security measures to its infrastructure, Coinbase made a name for itself as one of the most secure crypto asset managers in the industry.

As for Facebook’s stance on the matter, the head of Novi, David Marcus, stated that the giant’s digital wallet is set to provide assistance to the 1.7 billion people spread globally to access their digital assets despite not having a bank account.

Even though Novi’s concept might appear quite unusual to some crypto enthusiasts, Facebook seems to address a different crypto audience by simplifying the access to digital assets without relying on a bank.

“We chose USPD so that we can test our systems with a stablecoin that has been operating successfully for over three years and that has important regulator and consumer protection attributes,” Marcus said in a statement.

“USPD reserves are fully backed by the U.S. dollar and are helping 100 percent in cash and cash equivalents. This means that people can easily withdraw their money in their local currency when they choose,” he added.

As for availability, the digital platform will be deployed on the App Store and Android Play Store, where people can sign up by using a government ID, while money withdrawal options presented on the platform may vary by country.

Regulatory stance on Facebook entering the crypto market

The moment Facebook publicized news of its cryptocurrency project, global regulatory authorities fixated their attention on the Big Tech company. Worldwide scrutiny, in addition to the U.S. House of Committee on Financial Services, has endlessly vocalized its suspicion of Facebook’s plan to enter the decentralized market.

But as the regulatory eye gazes deeper and deeper into Facebook’s conduct, can the tech titan be trusted with users’ digital wallets?

Since its surfacing to the digital scene ten years ago, Facebook manifested into one of the world’s largest companies and most influential ones. As it metamorphosis into a global digital phenomenon, regulators constantly assess the company’s plans and ulterior motives.

Senators Brian Schatz, Sherrod Brown, Richard Blumenthal, Elizabeth Warren, and Tina Smith from the democratic party expressed their disapproval of the tech mogul’s never-ending efforts to enter the decentralized field of blockchain by founding its own cryptocurrency and digital wallet.

“Facebook is once again pursuing digital currency plans on an aggressive timeline that has already launched a pilot for a payments infrastructure network, even though these plans are incompatible with the actual financial regulatory landscape,” the senators wrote in a letter to CEO Mark Zuckerberg.

“Facebook cannot be trusted to manage a payment system or digital currency when its existing ability to manage risks and keep consumers safe has proven wholly insufficient,” the letter added.

The Senators letter clearly states that even though Novi is still in its pilot phase, it will not be exempted from regulatory scrutiny from lawmakers as Facebook has proved, from its own behavior, that it cannot be entrusted as it has raised unsettling concerns.

“We look forward to responding to the committee’s letter,” Novi’s spokesperson addressed the issue.

Daryn is a technical writer with thorough history and experience in both academic and digital writing fields.

Cryptocurrency

Cryptocurrencies reach post record inflow, rise of the Omicron asset

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CoinShares revealed Monday a heavy institutional investor flow into cryptocurrency products and funds despite a substantial drop in the past weeks, as a new digital asset emerges to the scene, carrying the same title after the new coronavirus variant, the Omicron.

Despite its rising record inflows in 2021’s first 11 months, cryptocurrency has marked a new all-time low with the arrival of a new COVID-19 variant.

As of November 26th, digital assets’ total incursions into the cryptocurrency sector reached a whopping $9.5 billion, compared to 2020’s Bitcoin inflow of $6.7 billion, with a matter of one week reaching $306 million.

According to data from digital asset manager CoinShares, Bitcoin witnessed its heftiest inflow of $247 million after releasing another investment asset in Europe. During that time, European Investment management firm Invesco issued its bitcoin exchange product in the continent, according to media reports.

Concurrently, asset manager WisdomTree also registered a trio of cryptocurrency basket exchange-traded products (ETP) into the Swiss Stock Exchange (SIX) and Frankfurt-based Börse Xetra, as stated by CoinDesk. 

In parallel, CoinShare also unveiled that cryptocurrency has attained global inflow tallying to $2.7 billion for 11 consecutive weeks. Last week, the world’s largest crypto asset, Bitcoin, endured a heavy price drop by 2.3 percent, following a 10.4 percent from a prior week.

Last Friday, Bitcoin endured another plunge of almost 9 percent as investors abandoned the decentralized currency with fear of heavy impact support by the emergence of a new COVID-19 variant, Omicron, with last value fluctuation rising to 2 percent, with Bitcoin value reaching $58.483.

However, the globally renowned asset quickly recovered from its demise, following global markets attaining a smoother and soother bearing in valuation on Monday.

“Inflation is skyrocketing, and people are searching for more alternatives for their money in the bank,” chief of cloud-based automated crypto trading bot Cryptohopper, Ruud Feltkamp, said in a statement.

“I don’t think it’ll take long until investors see this as a ‘cheap’ buying moment. We are still in the midst of the bull cycle, and I think rising inflation will lead to more money being allocated to stocks and crypto,” he further added. 

Shortly after presenting itself to the investor registry, the value of the newly risen digital asset hit $688 from Friday till Monday, before witnessing a plunge of approximately 75 percent, CoinGecko revealed.

Omicron, defined as “a decentralized treasury-backed cryptocurrency protocol,” initiated trading at around $371, and by Thursday, it marked an estimated value of $65.

Last week, the World Health Organization branded the latest coronavirus variant Omicron, with an expanded list of countries broadcasting the hazardous intensity of it carrying “very high” worldwide threats of waves, even though scientists revealed that would take weeks to fully comprehend the severity of the variant spread on a global scale.

While the ambiguity of Omicron’s launch date lingers, data from GoinGecko demonstrated that the token emerged on the scene on November 8th, with a Telegram channel labeled OmicDAO was launched a day before.

Currently, there is no official and direct representative of the Omicron token.

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U.S. federal agencies aim to clarify crypto legality

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U.S. regulators uncovered their future plan to address the rise of cryptocurrency for the upcoming year, with focus directed at the “greater clarity” concerning the legality of decentralized transactions, reported by Bloomberg.

The Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), and Office of the Comptroller of the Currency (OCC) unveiled their future scheme to address the uprise of cryptocurrency, placing the digital asset with utmost priority for 2022.

The plan could potentially focus on stablecoin issuance via loan collateral and the manifestation of cryptocurrency on enterprise balance sheets. The three federal entities aim to examine the needed means to employ bank capital and liquidity standards to U.S.-based banking organizations.

The shared roadmap has yet to be finalized, given that the agencies are looking into different issues to accommodate the market’s changes. It will adhere to crypto policy “sprints” to assist in structuring regulatory priorities for the upcoming year.

The OCC, the Reserve, and the FDIC’s goals are to determine any potential threats and establish the efficacy of current rules. While there is no certainty that the roadmap will create fundamental changes, however, one thing is certain though, it will not work in favor of holders of decentralized assets.

The American regulatory move on cryptocurrency will proceed with caution, with crypto users having to proceed with cautions and hold back on specific activities to adhere to the word of law.

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Cryptocurrency

Consortium of Japanese firms assesses digital currency for 2022 launch

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A consortium of almost 70 Japanese firms revealed on Wednesday in a conference its plan to initiate an experimental phase of testing a yen-based digital currency to be ready for launch in early 2022.

Three of the country’s mega-banks have always shown intentions of joining on the decentralized currency, which will mainly be supported by bank deposits, while utilizing a known platform to hasten a transfer of massive funds and settlement between companies, including cutting costs.

The consortium will incorporate Mitsubishi UFJ Financial Group Inc., Mizuho Financial Group Inc, and Sumitomo Mitsui Financial Group Inc. Tmizhuhese companies have had meetings regularly for the past year to examine the required measures to create a widespread infrastructure for digital payments.

In parallel, Japan’s three mega-banks also represented their private digital payment systems but have failed to mirror the same effort provided by financial technology entities, such as Softbank Group-backed PayPay – the multinational conglomerate is not a part of the consortium.

“A digital currency system built on a bank deposit-backed common platform will fit the Central Bank Digital Currency (CBDC) that could be planned and implemented in Japan,” special advisor to DeCurret and former head of Japan’s Financial Service Agency, Toshihide Endo, said during Wednesday conference.

The Japanese consortium will also incorporate a multitude of lenders, including Japan Post Bank Co Ltd, brokerages and insurers, and non-financial companies, such as Nippon Telegraph Corp, Kansai Electric Power Co Inc, and East Japan Railway Co.

In addition, other companies will also investigate options to gauge a currency such as this, all while experimenting with different uses for the digital currency in various industries, from energy to retail.

From another aspect, the consortium’s approach to releasing its own plan to digital currency will most likely trickle down the Bank of Japan’s scheme of launching its own CBDC, with regulators revealing they are working in synchronization with the BOJ if a digital currency is to be issued.

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