US Senators criticize Facebook’s new crypto wallet Novi

Facebook yesterday unveiled its new crypto wallet Novi, originally intended for Facebook-owned stablecoin Diem

Social networking service provider Facebook yesterday selected Coinbase as its custody partner for Novi. The news was great for Coinbase, whose shares skyrocketed after being earmarked as the exchange of choice for custody services for users logging into the wallet.

Coinbase confirm the news on Tuesday and stated that the offer will start with a pilot program. Users of the Novi platform will have the opportunity to receive and send cash abroad immediately and without fees, while ensuring the security of their transactions. Coinbase Custody will handle the transactions. Users will hold their money in Pax Dollars (USDP Stablecoin), which they will then use to conduct transactions.

“Remittances are a crucial way to achieve financial inclusion. Today we are launching a small pilot project with the Novi Wallet digital app in two countries – the USA and Guatemala. People can send and receive money instantly, securely and free of charge”, sagte David Marcus, head of Facebook’s F2 finance department.

Facebook justifies its decision to launch the USDP stablecoin with consumer protection, key regulatory aspects and full fiat support for the currency. However, Facebook plans to switch its wallet from USDP to Diem at some point. The tech giant explained the change by saying that the latter offers better consumer protection measures and controls.

“The goal for Novi has always been, and will always be, to be interoperable with other digital wallets, and we believe that a purpose-built blockchain for payments, such as Diem, is critical to delivering solutions to the problems people are experiencing with the current payment system.”, explained Facebook.

Diem was launched in 2019 under the name Libra, but the proposed stablecoin has been plagued by setbacks and endless trials. In particular, Senators Brian Shatz and Sherrod Brown wrote to the social network to complain that the project exposes both consumers and the financial system to several risks.

Shortly after Facebook launched its Novi Wallet, call the two senators, along with Richard Blumenthal, Elizabeth Warren and Tina Smith, sent a letter to Facebook asking it to discontinue the Diem and Novi projects. The senators complained that Facebook has not set out how it intends to thwart criminal activity and illegal financial transactions with its new product.

“You can’t trust Facebook to manage a payment system or a digital currency if its previous ability to manage risk and protect consumers has proven to be completely inadequate. We urge you to immediately discontinue your Novi pilot project and commit not to bring Diem to market.”

“You can’t trust Facebook to manage a payment system or a digital currency if its previous ability to manage risk and protect consumers has proven to be completely inadequate. We urge you to immediately discontinue your Novi pilot project and commit not to bring Diem to market.”

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