Sen. Shatz: Facebook Cannot Be Trusted to Manage Cryptocurrency & Digital Wallet

US Sen. Brian Schatz (D-HI) and four other senators sent a letter today to Facebook CEO Mark Zuckerberg urging the company to end its revived effort to launch a rebranded cryptocurrency called Diem, and to immediately discontinue its pilot of digital wallet Novi.

Facebook announced this morning its pilot program of Novi in Guatemala and parts of the United States. Novi, which is available as an app from Apple and Google, allows users to send and receive the Pax dollar, a coin run by blockchain company Paxos.

“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,” said the letter sent by senators Schatz, Sherrod Brown (D-OH) and Chairman of the Senate Banking, Housing and Urban Affairs Committee, Richard Blumenthal (D-CT), Elizabeth Warren (D-MA) and Tina Smith (D-MN).

The senators also wrote in their letter to Zuckerberg: “Facebook is once again pursuing digital currency plans on an aggressive timeline and has already launched a pilot for a payments infrastructure network, even though these plans are incompatible with the actual financial regulatory landscape—not only for Diem specifically, but also for stablecoins in general. 

“Unfortunately, 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).”

In October 2019, Senators Schatz and Brown wrote to members of the Diem Association’s predecessor, the Libra Association, and expressed deep concerns about the risks the project posed to consumers and the financial system. Facebook subsequently shelved Libra amid regulatory scrutiny, but the company has now revived its efforts under new branding.

The full text of the letter is available here.