Senator Democrats asked Facebook to stop its digital wallet project and to cease managing cryptocurrency. They wrote to Mark Zuckerberg Tuesday.
This letter comes just hours after Facebook launched Novi (a new digital wallet) as part of a pilot program in the US. Facebook announced its intention to enter the cryptocurrency market over two years ago. However, the Libra digital currency project was stopped by regulators and lawmakers. Later, the Libra currency was rebranded as Diem and has not yet been released with the new wallet product.
This letter is just hours after Facebook launched Novi.
The Verge requested comment from Facebook but Facebook didn't immediately respond.
Facebook's Novi wallet, which does not have its own currency will allow users to send money and receive it using the Paxos stablecoin through a partnership with Coinbase. Coinbase is the custody partner and holds the funds. Facebook's David Marcus, the head of F2 (Facebook Financial), stated Tuesday that they still plan to launch Novi With Diem as soon as it has received regulatory approval.
After weeks of back-and-forth with lawmakers skeptical of Facebook's Libra project, the House and Senate summoned Zuckerberg to testify on the Libra project in 2019. This hearing was held just one year after Facebook's Cambridge Analytica scandal. The lawmakers were skeptical of the company's credibility.
These same concerns were raised by senators in Tuesday's letter. They wrote that Facebook cannot be trusted with managing a digital currency or payment system when its current ability to manage risks has been completely compromised. We ask you to immediately stop your Novi pilot, and to promise that you will not market Diem.
Frances Haugen, a Facebook whistleblower, testified before the Senate Commerce Committee earlier this month about the potential harms that Facebook and its products can cause to users. Republicans and Democrats were concerned about how Instagram could harm teenagers. Haugen's testimony was already met with legislative proposals to regulate it.
According to a Monday Facebook Newsroom tweet, the Novi criticism also comes as Facebook prepares for further disclosures from Haugen.