A group of US lawmakers stated that Facebook Inc cannot be trusted to manage cryptocurrencies and urged social media platforms to immediately stop its small pilot of a cryptocurrency wallet called Novi, which it launched on Tuesday.

U.S. Democratic senators Brian Schatz, Sherrod Brown, Richard Blumenthal, Elizabeth Warren and Tina Smith voiced their opposition to Facebook’s two-year-old effort to launch a cryptocurrency and digital wallet. “Facebook has once again implemented digital currency plans on an aggressive timetable, and has already launched a pilot payment infrastructure network, although these plans are incompatible with actual financial The regulatory environment does not match.” Zuckerberg.

The senator wrote: “When Facebook’s existing risk management capabilities and the ability to ensure consumer safety prove to be completely insufficient, Facebook cannot be trusted to manage the payment system or digital currency.” The senators’ letters indicate that even a small pilot of Facebook’s cryptocurrency wallet will face scrutiny by legislators and regulators, who have previously raised antitrust and other concerns. A Novi spokesperson said: “We look forward to responding to the committee’s letter.”

Facebook launched a cryptocurrency project in June 2019 as part of its efforts to expand into e-commerce and global payments. But the project was immediately strongly opposed by global policymakers, who feared that it would weaken their control of the currency system, encourage crime and compromise user privacy. In December, the project was renamed to regain regulatory approval, and its scope was further reduced to a single dollar backed digital coin. In another development, the U.S. Senate will hold hearings on October 26 with technology companies Snap’s Snapchat, TikTok and Alphabet’s YouTube on the impact of their platforms on young users, the group said on Tuesday.

Big technology companies are facing their big tobacco moment-a moment of liquidation,” said Richard Blumenthal, chairman of the Senate Commerce Consumer Protection Subcommittee, who chaired the hearing. “We need to understand the impact of popular platforms such as Snapchat, TikTok and YouTube on children, and what companies can do to better protect their safety.” The top Republican Senator Marcia Blackburn of the subcommittee said: “TikTok, Snapchat and YouTube have all played a leading role in exposing children to harmful content.”

A Snap spokesperson said the company looks forward to discussing their “methods to protect the safety, privacy and well-being of the Snapchat community.” TikTok confirmed that it would participate, but YouTube did not immediately respond to a request for comment.

News Source : The Hindu