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Senators pressure Facebook to stop Novi wallet pilot

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A group of US senators called on Facebook CEO Mark Zuckerberg to immediately stop Novi digital wallet pilot. Moreover, make a commitment not to bring the Diem stablecoin to the market.

Thus, in an open letter, Brian Schatz, Sherrod Brown, Richard Blumenthal, Elizabeth Warren and Tina Smith expressed “strong rejection of Facebook’s renewed efforts to launch a cryptocurrency and digital wallet.”

The lawmakers recalled that the company has repeatedly committed itself not to launch a digital currency without the approval of federal financial regulators.

The risks that stablecoins pose to financial stability

“Despite these assurances, Facebook is again implementing plans for digital currency in a tight timeframe; and has already launched a pilot project for the network’s payment infrastructure. Although this is incompatible with the real landscape of financial regulation. Not only for Diem, but also for stablecoins in general,” the politicians said.

They noted that getting approval to transfer money “in almost every state”; is not equivalent to “the blessing of all US regulatory authorities.”

Federal agencies are only studying the risks that stablecoins pose to financial stability; and are considering ways to eliminate them, the politicians stressed. Also, in their opinion, Facebook has not provided “satisfactory explanations”. On how it will prevent the use of Diem in illegal financial activities.

Diem Association

The senators recalled the recent scandal with the work of algorithms of the social network. Therefore, they said that in pursuit of profit, the company shows indifference to the harm that its products cause to consumers. “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 letter says.

On the eve of the corporation announced the launch of pilot testing of the Novi wallet in the USA and Guatemala using the USDP stablecoin from Paxos. The head of Facebook’s payment division, David Marcus, again assured that Diem will be launched only after regulatory approval.

In the organization behind the development of the stablecoin, the Diem Association, in response to the senators’ letter, noticed that the pilot was not related to Diem. They also reminded lawmakers that Facebook is one of the two dozen members of the association. In addition, it is wrong to directly link it to the digital currency project. Regarding concerns about the use of stablecoin in illegal financial activities; Diem Association indicated that FinCEN gave a positive review regarding the Diem control system.

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