Immediately after receiving a letter from five senators regarding halting all development work of Facebook’s Novi Digital Wallet and Diem stablecoin, Diem has written back to the senators with its defense. In the response, Diem has made it clear that they function as a separate entity and not a subsidiary of Facebook. Both Diem and the Novi Digital Wallet, thus, cannot come under regulations for Facebook’s track record of unsatisfactory data security.
In their response, Diem reminded the senators that few senior regulators thought Diem was the best stablecoin project in the United States. The letter sent to Mark Zuckerberg on 19th October opposed Facebook’s Diem stablecoin and Novi Digital Project in strong words. They said that Facebook’s track record of compromising with user data makes it impossible to think that they will handle sensitive financial data responsibly. The Senators were vehemently against the idea of Facebook entering the crypto space. A few hours prior to getting the letter, Novi launched its pilot program in the United States and Guatemala. Users could transact in Pax Dollars (USDP) using the Novi digital wallet.
In their response, Diem made it clear that they are not a part of Facebook. They even said that there must have been some misunderstanding on the senators’ part. Diem has not only distanced itself from Facebook but also from the Novi digital wallet.
On a legal and technical level, the claims of Diem have value. However, it is unlikely that they will get away due to a technical loophole. Diem’s prospects stand in a vulnerable position as of now.