Claiming to be the Best Stablecoin Design, Diem Denies Connect with Facebook
JAKARTA – The Diem Stablecoin project has distanced itself from Facebook in response to Democratic Senators calling for an immediate halt to the company's Novi crypto wallet.
Diem also claimed senior regulators called it “the best-designed stablecoin project the US government has ever seen.”
In an October 19 letter sent to Facebook CEO Mark Zuckerberg, Senators including crypto critic Elizabeth Warren voiced their "strongest opponents to Facebook's revived efforts to launch cryptocurrencies and digital wallets."
Earlier in the day, the Novi wallet was launched in partnership with Coinbase, with pilot projects in the US and Guatemala to allow users to buy, send and receive Pax Dollars (USDP) through their Novi account.
Diem's response to the letter stated that Senators had misunderstood the "relationship between Diem and Facebook," while also distancing themselves from the Novi wallet pilot:
"Diem is not Facebook. We are an independent organization, and Novi from Facebook is just one of more than two dozen members of the Diem Association. Novi's pilot with Paxos is unrelated to Diem."
While technically correct, the argument may not be enough to allay U.S. Senators' concerns.
Diem was previously known as Libra and has strong ties to the social media giant, as the stablecoin project was originally proposed by Facebook in 2017, and Facebook Chief Financial Officer David Marcus is also a co-founder and board member of Diem.
In their letter, the Senators asserted that Facebook was "untrustworthy" because the company had made several moves that ultimately "harmed its users and society at large." He also said there had been no "satisfactory explanation of how Diem would prevent illicit financial flows and other criminal activities."
Diem defended itself by claiming to have "the most powerful control in the industry."
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“Beyond financial crime compliance, we engage extensively with interagency regulatory teams on project design. As part of that review, we made adjustments to reflect the feedback we received, and we were told by senior regulators that Diem is the best-designed stablecoin project the US government has ever seen,” said a source from Diem.
Diem concludes by saying that when the stablecoin project finally launches, he will do so with the “belief that Diem’s payment system is secure, will protect consumers, and will fight financial crime.”