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Novi Rollout Met with Fast Senate Resistance

Novi Rollout Met with Fast Senate Resistance

Key Takeaways

  • In a letter addressed to Tag Zuckerberg and publicly launched these days, the Senate Banking Committee called upon Facebook to without delay pause its digital forex initiatives.
  • Facebook had launched its digital pockets product, Novi, only hours earlier.
  • The Committee further called upon Facebook to decide to no longer bring its Diem cryptocurrency to market.

Facebook’s Novi pockets start used to be met with stiff opposition these days from the U.S. Senate Banking Committee, which issued an start letter calling on the company to pause its digital forex initiatives. The news additionally comes the identical day Coinbase launched custody provider for Novi.

Pushback from Washington

In a critical step for Facebook’s digital forex initiative, the social media extensive launched its digital pockets Novi these days for customers in Guatemala and much of the United States. The transfer used to be met with instantaneous resistance, on the factitious hand, in the originate of an start letter to Tag Zuckerberg from the U.S. Senate Banking Committee, which it issued “to voice [the Committee’s] strongest opposition to Facebook’s revived effort to start a cryptocurrency and digital pockets.”

It is no longer all the time the first time that Facebook’s digital forex initiatives have hit a congressional wall. In 2019, the near of Facebook’s first flagship cryptocurrency, Libra, used to be all but stopped in its tracks by a moratorium issued by House Monetary Providers Committee Chair Maxine Waters. Facebook later started setting up a definite cryptocurrency, Diem. The Committee, on the factitious hand, expressed difficulty that Facebook had no longer sufficiently addressed Congress’ regulatory concerns surrounding Libra sooner than launching yet yet any other digital forex—nor, it alleges, did Facebook anticipate regulatory readability from federal authorities sooner than proceeding with its initiatives, because it had promised to enact.

The Committee points out that while Novi’s lead, David Marcus, did attain approval from “virtually every reveal,” the Committee alternatively wrote: “To be obvious, your ability to score reveal-issued money transmitter licenses is no longer only like acquiring the blessing of ‘all U.S. regulators,’ as you acknowledged on your testimony two years ago.”

The Committee additionally expressed concerns over stablecoins extra in overall in these days’s letter, calling plans for price programs in step with stablecoins “incompatible with the actual financial regulatory landscape.” The Senators additionally expressed doubt regarding Facebook’s ability to properly assist watch over stablecoins within its ecosystem, writing: “Facebook can’t be trusted to assist watch over a price gadget or digital forex when its existing ability to assist watch over dangers and assist customers safe has confirmed wholly insufficient.”

Essentially basically based mostly on a tweet by Marcus, the Diem stablecoin used to be no longer intended to be incorporated in the Novi rollout these days.  On this point, Marcus emphasised that Facebook only planned to start Diem and incorporate it with Novi upon regulatory approval.

Disclaimer: On the time of writing, the author of this piece owned BTC, ETH, and numerous different assorted cryptocurrencies.

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