Facebook (FB) has a plan to take over the world of digital wallets, using cryptocurrency to separate it from the likes of PayPal (PYPL) and other digital payment platforms. Its upcoming digital wallet, Novi, will be built upon the still-pending stablecoin Diem.
Diem is the cryptocurrency that grew out of Facebook’s in-house project that began in 2017 and was first known as Libra. After it was publicly revealed in 2018, the coin received intense scrutiny in Washington, DC, and around the industry.
The cryptocurrency project, rebranded as Diem, now operates as an independent association but retains close ties to Facebook. Facebook executive David Marcus straddles both worlds, sitting on Diem’s board of directors and heading up Facebook Financial — which plans to launch Novi in the coming months.
This week, Marcus sat down with Yahoo Finance for a wide-ranging conversation for Influencers with Andy Serwer, a weekly series featuring biggest names in business, politics, entertainment, sports, and academia. Speaking to Yahoo Finance’s editor-in-chief, Andy Serwer, Marcus made the case for why Facebook still believes Diem is the right platform to build Facebook’s new digital wallet around.
“We believe that in terms of consumer protections, both on the purpose built payments blockchain that Diem is and on the stablecoin itself, it’s in a class of its own,” Marcus says.
Diem digital wallet trying to ‘solve the systemic issues’
Marcus says it would have been easier to build the wallet to run on “existing rails.”
“As a matter of fact, a lot of people internally/externally have been puzzled by why we didn’t do it that way,” he added. But using existing rails, he said, “would actually not solve the systemic issues that we believe exists currently in our current payments infrastructure.”
Diem coins will be backed by a combination of cash or cash equivalents and short-term government securities, which Marcus says will keep them secure. Ultimately, he said, that is “much better than a current deposit with a traditional wallet here in the U.S.”
Speaking to Yahoo Finance, Marcus also addressed initial concerns over whether Facebook’s coin had enough provisions to stop criminals who have gravitated to cryptocurrencies.
“I actually think and strongly believe that new infrastructure that enables more real time reporting to all of the right authorities at the right time,” Marcus says.
A number of other blockchains have improved their traceability, he acknowledged. But, he added, “I think in our case, we’ve taken it like really, really to a whole new level.”
A goal of launching Diem cryptocurrency ‘before the end of this year’
Whether the industry agrees with Marcus’s outlook is yet to be seen. Libra has struggled to hold on to members with financial giants like Mastercard and Visa leaving the project in 2019.
Back then, Marcus often discussed the association’s goal of 100 members by launch, including in a Yahoo Finance interview at the time. Currently, the association lists 26 members on its site with the regulatory approval process still ongoing.
In a 2019 interview with Yahoo Finance’s Brian Cheung, Marcus insisted that Libra was “absolutely not” in jeopardy. Still, the launch date of the project was pushed back from 2020. Currently, Novi aims to launch before the end of the year along with Diem. Still, Marcus added in his most recent interview with Yahoo Finance, “We are definitely not going to launch without the proper regulatory framework.”
Ben Werschkul is a writer and producer for Yahoo Finance in Washington, DC.