Facebook Likes Coinbase Custody for Digital Wallet Pilot Program

key takeaways

Coinbase managed roughly $180 billion worth of crypto assets on its platform as of June
Coinbase (COIN) shares jumped 4% following the announcement; Facebook is up 1.25% on the day

Facebook will soon store funds from its digital wallet, Novi, with the cryptocurrency custody arm of Coinbase, the company announced 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 reported.

Novi will go live 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.

“We intend to launch Novi with Diem once it receives regulatory approval and goes live.”

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

Coinbase announced 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 two million people have joined the waitlist for Coinbase NFT marketplace.

Facebook’s Novi may be able to support NFTs 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 Bloomberg 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.

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

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