Senators call on Facebook to shelve Novi cryptocurrency project

Senate Democrats referred to as on Fb to finish its digital pockets and cryptocurrency undertaking in a letter to chief government Mark Zuckerberg Tuesday, saying that the corporate “can’t be trusted to handle cryptocurrency.”

The letter comes hours after Fb launched Novi, a brand new digital pockets, as a part of a “small” pilot program within the US and Guatemala. Fb first introduced its plans to enter the cryptocurrency business over two years in the past, however the digital foreign money undertaking, referred to as Libra, was halted after heavy criticism from lawmakers and regulators. The Libra foreign money was later rebranded as “Diem,” which has but to be launched alongside the brand new pockets product.

Of their letter, Sens. Brian Schatz (D-HI), Sherrod Brown (D-OH), Elizabeth Warren (D-MA), and others wrote, “Fb is as soon as once more pursuing digital foreign money plans on an aggressive timeline and has already launched a pilot for a funds infrastructure community, regardless that these plans are incompatible with the precise monetary regulatory panorama — not just for Diem particularly, but additionally for stablecoins usually.”

Fb didn’t instantly reply to a request for remark from The Verge.

With out its personal foreign money, Fb’s Novi pockets will enable customers to ship and obtain cash utilizing the Paxos stablecoin in a partnership with Coinbase. Coinbase serves because the custody accomplice, holding the precise funds concerned with the pilot program. In an announcement issued Tuesday, Fb’s David Marcus, head of F2 (Fb Monetary), mentioned that the corporate nonetheless plans to launch Novi with Diem “as soon as it receives regulatory approval and goes reside.”

In 2019, the Home and Senate hauled Zuckerberg in to supply testimony on the Libra undertaking after weeks of forwards and backwards with lawmakers who have been largely skeptical of Fb’s undertaking. The listening to got here solely a 12 months after Fb’s Cambridge Analytica scandal, and lawmakers questioned the corporate’s credibility in mild of it.

In Tuesday’s letter, the senators invoked these similar considerations. “Fb can’t be trusted to handle a fee system or digital foreign money when its present capacity to handle dangers and hold shoppers protected has confirmed wholly inadequate,” they wrote. “We urge you to right away discontinue your Novi pilot and to commit that you’ll not convey Diem to market.”

Earlier this month, Fb whistleblower Frances Haugen got here earlier than the Senate Commerce Committee to testify on the harms Fb and its different merchandise can inflict on customers. Republicans and Democrats shared considerations over how platforms like Instagram may damage youngsters, and Haugen’s testimony has already been met with legislative proposals to manage the corporate.

The Novi criticism from lawmakers additionally arrives as Fb is bracing itself for extra disclosures from Haugen, in keeping with a Monday Fb Newsroom tweet.