WASHINGTON–Democratic senators are calling on Facebook founder and CEO Mark Zuckerberg to halt the launch of its brand new cryptocurrency wallet Novi.
"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. "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 Sen. Brian Schatz (D-HI) and was signed by Elizabeth Warren (D-MA), Tina Smith (D-MN), Richard Blumenthal (D-CT), and Sherrod Brown (D-OH).
The letter follows an announcement by Facebook that users in the U.S. and Guatemala can now sign up for Facebook’s pilot program.
According to Facebook, through Novi 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 U.S. dollar.
But the group of senators is saying not so fast.
"On multiple occasions, Facebook has committed not to launch a digital currency absent federal financial regulators' approval," the senators’ letter states, 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 U.S. regulators sign off.
‘Moving Fast & Breaking Things’
The earlier reference by Zuckerberg was to Diem, a Facebook blockchain-based payment system formerly known as libra. As CUToday.info reported, that project was 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 stated.
The letter also cites a comment made by David Marcus during the unveiling Novi. Marcus, who heads up Novi, said the company will "not launch without the proper regulatory framework." But stablecoins, the senators said in the letter, 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.