The news: Meta will retire its digital wallet Novi in September, bringing to an end its cryptocurrency project, per its website. The Big Tech firm advised users to withdraw their funds.

How we got here: Meta originally designed Novi to hold the Facebook-backed digital currency Diem (formerly known as Libra), but Meta abandoned the project after being plagued by US regulatory scrutiny.

Meta then switched gears and planned to operate Novi as a peer-to-peer payments service backed by an external stablecoin. In October, it kicked off a pilot that let users send and receive money between the US and Guatemala for free using Paxos’s Pax Dollar (USDP), a stablecoin pegged to the US dollar.

What went wrong? Meta didn’t provide a reason for the shutdown, but the company has started cutting back across lines of business as it braces for what CEO Mark Zuckerberg expects will be “one of the worst downturns that we’ve seen in recent history.”

Two other factors may also have influenced Meta’s decision to shutter Novi:

• Former Novi head David Marcus’ departure. Marcus left the company in December to start his own crypto venture. Marcus played a central role in developing Novi and the defunct Diem project. His departure may have kneecapped the unit’s operations and forced Meta’s hand.
• The deepening crypto winter. The crypto market has gone belly up as the US contends with rising interest rates and fears of a recession. Even crypto heavyweights like Crypto.com and Coinbase have laid off employees—sending reverberations throughout the wider digital currency sector. Market conditions may have made projects like the Novi wallet less desirable for Meta to pursue as a standalone service.

What’s next? Meta plans to repurpose Novi’s digital wallet technology for its push into the metaverse.

Meta is working on a “digital wallet for the metaverse” that will include a range of financial products. Cryptocurrencies are the most probable payment method in the metaverse, so Novi’s tech could support a framework for metaverse payments that would mimic a crypto wallet.

Novi may also support Meta’s push into nonfungible tokens (NFTs): The tech giant is piloting an NFT project for select Meta users in the US as part of its move into the much-hyped market.