A group of Democratic Senators in the US have demanded that Facebook discontinue its Novi crypto wallet pilot project. In a letter addressed to CEO Mark Zuckerberg, the group also asked him to commit not to bring its digital currency "Diem" to market.
The list of Democratic Senators includes Brian Schatz, Sherrod Brown, Richard Blumenthal, Tina Smith and perennial crypto sceptic Elizabeth Warren. The Senators felt Facebook was pursuing digital currency plans on an aggressive timeline, despite the fact that these plans wouldn't be compatible with the actual financial regulatory landscape. They added that this applied not only to Facebook’s projects specifically but also to stablecoins in general.
Facebook's safety standards
The letter highlights Facebook’s recent scandal as one of the primary reasons for the Senators’ opposition. Earlier this month, former Facebook employer Frances Haugen appeared on CBS News to disclose a trove of internal research. According to the whistleblower, Facebook had performed research indicating that its influence was harmful to adolescents, yet chose not to act on it.
“Unfortunately, Facebook’s decision to pursue a digital currency and payments network is just one more example of the company moving fast and breaking things. 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.” - Letter for Mark Zuckerberg by the Senators
Novi digital wallet
The letter was composed the day after Facebook announced the Novi pilot project, in association with Paxos and Coinbase. Facebook hoped to address some of the challenges posed by current international payment systems with Novi. Ultimately, Facebook’s intent with the digital wallet is to help people securely send and receive money abroad instantaneously, without fees.
The pilot project was launched in the United States and Guatemala, to enable those abroad to send home remittances. Another purpose of the pilot project will be to test the operational capabilities of their system, such as core features functions, their compliance program and customer care response, according to the head of the project David Marcus. Although Novi does not use Facebook's own stablecoin Diem, it still seems to face opposition by political and regulatory bodies.