Just hours after it had made the announcement of a pilot of its cryptocurrency wallet, Novi, Facebook was ordered by US lawmakers to cease the project in a letter to CEO Mark Zuckerberg.
In the letter, five Democratic Senators urged the company to halt the pilot, citing concerns over the handling of cryptos by the social media giant.
‘Facebook Cannot Be Trusted’
Many concerns have been raised surrounding Facebook in recent times regarding the company’s “relentless pursuit of profits at the expense of its users”. Joining the backlash the company has received, the senators’ letter stated that:
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.Letter to Facebook signed by five Democratic US Senators
When Facebook first unveiled plans for its crypto project in mid-2019, it already faced a global regulatory backlash. Concerns were raised that the launch of private money by a company of Facebook’s magnitude and user base could destabilise the entire monetary system.
The backlash prompted several partners to leave the project, and the project underwent a rebranding from Diem to Libra.
Facebook responded by saying lawmakers misunderstood the relationship between Diem and Facebook. “Diem is not Facebook”, wrote the company, making it clear Diem is an independent organisation, and that Facebook’s Novi is only one of more than two dozen members of the Diem organisation.
Facebook has said that Novi, once it goes live, will make cross-border payments more efficient and reduce transaction costs.
Lawmakers Remain Critical of Facebook
In the letter issued to Zuckerberg, the senators wrote:
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.
This is certainly not the response Facebook was hoping for, though it is not entirely unexpected. Earlier this month, Facebook announced it would hire 10,000 new employees over the next five years to start building its metaverse. However, many are sceptical of this effort and are instead calling on the company to move toward creating a safer, more responsible, and ultimately more trustworthy social platform.
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