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Democratic senators say they don't trust Facebook with digital currency and urge the company to stop Novi launch


Facebook logo and a cryptocurrency coin are pictured in Kyiv on 29 July, 2021.

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Democratic senators on Tuesday called on Facebook founder and CEO Mark Zuckerberg to stop the launch of its new cryptocurrency wallet Novi, which the social media giant unveiled earlier in the day.

"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," the senators said in a letter dated October 19. "We urge you to immediately discontinue your Novi pilot and to commit that you will not bring Diem to market."

The two-page letter came from the office of Senator Brian Schatz and was signed by Elizabeth Warren, Tina Smith, Richard Blumenthal, and Sherrod Brown.

On Tuesday, Facebook announced that users in the US and Guatemala can now sign up for the pilot program.

Through Novi, a standalone app like Instagram and WhatsApp, users will be able to transfer money abroad instantly and with no fees. Novi users will be able to transact paxos dollar or USDP, a stablecoin created in 2018 whose value is pegged to the US dollar.

"On multiple occasions, Facebook has committed not to launch a digital currency absent federal financial regulators' approval," the senators said, citing a remark Zuckerberg made in 2019 before the House Financial Services Committee in which he said Facebook will not launch a payments system unless US regulators sign off.

At that time, Zuckerberg was referring to Diem, a Facebook blockchain-based payment system formerly known as libra. The project was ultimately shelved after a series of congressional hearings in 2019.

"Facebook's decision to pursue a digital currency and payments network is just one more example of the company 'moving fast and breaking things' (and in too many cases, misleading Congress in order to do so)," the senators added.

The senators also highlighted the comment of David Marcus during the unveiling of the product. Marcus, the head of Novi, said his team will "not launch without the proper regulatory framework." But stablecoins, the senators countered, and the risks that come with it, are still being discussed in the senate.

"In addition to the risks products like Diem pose to financial stability, you have not offered a satisfactory explanation for how Diem will prevent illicit financial flows and other criminal activity," the senators said.

At the beginning of the letter, the senators also underscored what they see as harmful effects on society due to its "relentless pursuit of profits at the expense of its users."

As for Novi, a spokesperson said: "We look forward to responding to the Committee's letter."

Read the original article on Business Insider