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Senators urge Facebook to scrap the Novi cryptocurrency project

In a letter to Facebook CEO Mark Zuckerberg on Tuesday, Senate Democrats demanded that the corporation cease digital wallet and cryptocurrency project, claiming that the business “cannot be trusted to manage cryptocurrency”.

The letter came only hours after Facebook debuted Novi, a new digital wallet, in the United States and Guatemala as part of a “limited” pilot program. Facebook first declared its plans to enter the cryptocurrency business more than two years ago, but the digital currency project, dubbed Libra, was shelved when lawmakers and authorities voiced strong opposition. Diem is the new name for the Libra currency, which has yet to be issued alongside the new wallet.

Senators urge Facebook to scrap the Novi cryptocurrency project

Image Source: Free Journal

“Facebook is once again pursuing digital currency plans on an aggressive timeline and has already launched a pilot for a payments infrastructure network, even though these plans are incompatible with the actual financial regulatory landscape — not only for Diem specifically, but also for stablecoins in general,” wrote Sens. Brian Schatz (D-HI), Sherrod Brown (D-OH), Elizabeth Warren (D-MA), and others in their letter.

“We look forward to responding to the Committee’s letter,” a Novi spokesman said in a statement to The Verge on Tuesday. Due to a cooperation with Coinbase, Facebook’s Novi wallet will allow users to send and receive money using the Paxos stablecoin. Coinbase is the pilot program’s custody partner, holding the actual funds involved.

Facebook’s David Marcus, the president of F2 (Facebook Financial), stated in a statement on Tuesday that the firm still plans to launch Novi with Diem “after it receives regulatory approval and goes live.”

After weeks of back and forth with senators who were mostly dubious of Facebook’s initiative, the House and Senate summoned Zuckerberg to testify on the Libra project in 2019. The session took place less than a year after Facebook’s Cambridge Analytica debacle, and lawmakers questioned the company’s integrity in the aftermath.

The senators raised the same concerns in their letter on Tuesday. “Facebook cannot be trusted to handle a payment system or digital currency,” they said, “since its current ability to manage risks and keep users secure has proven totally insufficient.” “We strongly encourage you to end the Novi pilot program immediately and pledge to not bring Diem to market.”

Facebook whistleblower Frances Haugen spoke before the Senate Commerce Committee earlier this month on the harms that Facebook and its other products can cause to users. Republicans and Democrats expressed worry about the impact of social media platforms like Instagram on minors, and Haugen’s testimony has already prompted legislative measures to regulate the company.

According to a Monday Facebook Newsroom post, the MPs’ criticism of Novi comes as Facebook prepares for additional Haugen disclosures.

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Also read: Facebook’s Novi taps Paxos and Coinbase ahead of its Diem launch



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