Facebook’s crypto wallet has been shot down by banking committee senators just hours after it launched a pilot.
Five Senators have called for the immediate closure of Facebook’s new crypto wallet just hours after it was launched in partnership with Coinbase.
Crypto skeptic Senator Elizabeth Warren was one of the five urging Facebook CEO Mark Zuckerberg to “immediately discontinue” the project. In a letter sent to Zuckerberg on Oct. 19, the five Democrat Senators wrote:
“Given the scope of the scandals surrounding your company, we write to voice our strongest opposition to Facebook’s revived effort to launch a cryptocurrency and digital wallet, now branded ‘Diem’ and ‘Novi,’ respectively.”
Diem is Facebook’s ambitious stablecoin project, formerly known as Libra, which has been the subject of heavy scrutiny and regulatory roadblocks for years resulting in a number of key partners pulling out of the venture. Novi is the firm’s crypto wallet, designed to hold the Diem token and other stablecoins.
Novi launched a pilot in the U.S. and Guatemala on Oct. 19 in partnership with Coinbase which will provide crypto custody services. The pilot will enable users to acquire, send and receive Paxos Dollars (USDP) through their Novi account.
On Oct. 20, Coinbase CEO Brian Armstrong congratulated co-creator and a board member of Diem David Marcus, adding “it takes a lot of perseverance to ignore the haters and ship.”
The shot across the bow came from the office of Senator Brian Schatz and was co-signed by Tina Smith, Richard Blumenthal, banking committee chairperson Sherrod Brown, and Elizabeth Warren.
They stated that Facebook has repeatedly made conscious business decisions to continue with “actions that have harmed its users and the broader society,” adding:
“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.”
In a letter from the company announcing the pilot, Marcus stated “We intend to migrate Novi to the Diem payment network once it receives regulatory approval.”
The firm has far loftier ambitions than just a crypto wallet and stablecoin in the digital space. On Oct. 17 Facebook revealed plans to create 10,000 high-skilled jobs in the EU over the next five years to build its own metaverse.