US Senators Urge Facebook to End Crypto Wallet Pilot Project
Five US senators wrote a letter to CEO and founder of Facebook, Mark Zuckerberg, begging him to put the company’s cryptocurrency plans on hold. Lawmakers said the company could not be trusted to handle crypto due to its inadequacy in risk management and consumer safety.
This letter was sent following the launch of Facebook’s new digital wallet, Novi, as part of a “little pilot”. Coinbase, a digital currency exchange listed on the Nasdaq, has been selected by Facebook as its pilot custodial partner.
The Coinbase base said active Novi users can get USDP through their Novi account, deposited with Coinbase Custody. In this case, it will be possible to instantly transfer USDP between Novi users.
What’s in the letter?
In their letter, the senators expressed their bold opposition to the company’s revived plans to launch a cryptocurrency and digital wallet dubbed Diem and Novi, respectively.
According to lawmakers, US regulators are still studying stablecoins and studying their risks and how to manage them. In this regard, Facebook should not be in a hurry to launch Diem.
The letter also stated that Diem poses risks to financial stability. Moreover, the CEO of Facebook and his team have not given adequate answers on how Diem will reduce illegal financial flows and other criminal activity.
As the letter continued, Facebook’s decision to sue the cryptocurrency and payments networks was described as “going fast and smashing things” to mislead Congress. Additionally, the company has been criticized for making decisions that have harmed its customers and society.
Towards the end of the letter, Mark was ordered to immediately suspend the Novi pilot and not to put Diem on the market.
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Diem responds to the letter
Diem criticized lawmakers for misunderstanding their relationship with Facebook. He explained that it is an independent organization and that Novi is only a member of the Diem Association. Moreover, the pilot that Novi led with Paxos has no connection with Diem.
Diem further condemned statements by senators saying he had failed to show how he could prevent illegal transactions. He revealed that the Treasury agreed with its financial crime compliance network.
The association has called its financial network the most comprehensive and reliable system in the industry. Additionally, the network does not allow anonymous transactions with unlisted wallets until they can be properly filtered for illicit funding risks.
Finally, Diem pledged that his payment system will increase security, consumer protection and reduce financial crime when the stablecoin project is launched.