On Tuesday, Democratic senators urged Facebook founder and CEO Mark Zuckerberg to halt the launch of Novi, the new cryptocurrency wallet the social media giant announced earlier in the day.
“Facebook’s current ability to manage risks and keep consumers safe cannot be trusted to manage a payment system or digital currency,” the senators wrote in a letter dated Oct. said. “We want you to stop your Novi pilot program immediately and commit to not bringing Diem to market.”
The two-page letter came from Senator Brian Schatz’s office and was signed by Elizabeth Warren, Tina Smith, Richard Blumenthal and Sherrod Brown.
Facebook on Tuesday announced that users in the US and Guatemala can now sign up for the pilot program.
Thanks to Novi, an independent application like Instagram and WhatsApp, users will be able to transfer money abroad instantly and at no cost. Novi users will be able to trade with USDP, a stablecoin that was released in 2018 and is pegged to the US dollar. “Facebook has committed multiple times that it will not launch a digital currency without the approval of federal financial regulators,” the senators said, referring to a statement Zuckerberg made before the House Financial Services Committee in 2019 that Facebook would not launch a payment system.
But in those statements, Zuckerberg was talking about Diem, a Facebook blockchain-based payment system formerly known as libra. The project was eventually shelved after a series of congressional hearings in 2019.
Senators also drew attention to David Marcus’ comment during the promotion of the product. Novi’s president, Marcus, said his team would “not start without the proper regulatory framework.” But senators opposed it, and the risks that come with it are still debated in the Senate.
Finally, the senators said, “In addition to the risks products like Diem pose to financial stability, you have not provided a satisfactory explanation of how Diem will prevent illegal financial flows and other criminal activity.”