TL;DR Breakdown
- Five US senators have objected to Facebook’s ongoing Novi wallet and Diem project. The social media giant and Coinbase are trialing the wallet in the US and Guatemala.
- The senators have accused Facebook of taking actions that’ve harmed society. They hold that Facebook is incapable of managing crypto or a payment system.
A few hours after launch, Facebook’s Novi wallet is already facing opposition. Five US lawmakers have written to Facebook demanding it stops the wallet’s development.
Facebook launched tests on the wallet on 19th October in partnership with Coinbase. These pilots are going on in the US and Guatemala. And they’ll help Novi account holders to transact in Paxos Dollars (USDP).
In the arrangement, Facebook provides the hardware while Coinbase offers crypto custody services.
The five are members of the powerful Senate Banking Committee. They include Senator Elizabeth Warren, who’s a known crypto skeptic. In their 19th October letter to Facebook’s CEO, they urged the company to stop the project.
Sherrod Brown, the committee’s chair, led the senators in signing the petition. Tina Smith, Richard Blumenthal and Brian Schatz help complete the quintet.
Facebook can’t manage crypto payments
The Senators also took a dig at Facebook’s reputation. They accused it of making decisions to pursue actions harmful to the broader society.
Further, they cast doubt on Facebook’s ability to manage a crypto payment system. That’s because it has been unable to protect its users from risks they face on its platform.
To them, Facebook’s recent scandals are reasons enough for their opposition to Novi. Additionally, they took issue with the firm’s continued pursuit of Diem.
Before known as Libra, Diem is the social media giant’s bold stablecoin project. The project has been subject to intense public scrutiny. It has also faced regulatory hurdles delaying its rollout.
These delays have led to some of the initial partners quitting the venture. As a result, Facebook has had to reorganize itself. It’s been pursuing the stablecoin afresh besides developing the Novi wallet.
The Novi wallet will support Diem besides other stablecoins. Facebook hopes to use the reconfigured Diem and Novi to win skeptics to its crypto foray over.
Novi is a game-changer
Diem’s board member David Marcus took to Twitter to announce the Novi trials. He tweeted that Novi will allow users instant, safe and feeless transactions.
The trials are assessing the wallet’s core functions. Again, they’re looking into the system’s customer care and compliance capabilities. He expressed optimism that they’d be able to show Novi’s stablecoin payment use case too.
He added that Novi supports interoperability. That’s why it’ll incorporate Diem once the crypto passes regulation. What’s more, they’re a challenger in the payment sector. And he claims they’re the game changer for many excluded by current systems.
The announcement has met a cold reception. Many replying to Marcus’ tweets are expressing concerns over their privacy and safety. Facebook has a bad rap for breaching users’ privacy.
After several false starts, Facebook is angling for a stake in the cryptoverse. The firm has grand ambitions within the digital space. And Diem and Novi are the first of them.
Facebook has announced plans to create its metaverse. To that end, it’ll be recruiting 10 thousand engineers from the European Union.
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