Five U.S. lawmakers wrote a letter to Zuckerberg urging him to discontinue the Novi and Diem ventures, stating that Facebook can’t be trusted to manage a digital currency.
In particular, the report links to risks of service disruption, hacks and other attacks on exchanges, and low levels of transparency in some markets.
The Deputy Governor said the risks posed by stablecoins as well as decentralized and derivatives trading on unbacked assets, were enough to require a more hands-on regulatory approach.
The platform would enable CBDCs to be transferred from one blockchain to another, and would also allow stablecoins to operate on different blockchains.
The firm revealed in a recent regulatory filing that the Securities and Exchange Commission (SEC) subpoenaed it in July, although it refused to reveal what the probe was about.
The report views digital currency a trending innovation in finance, but also a threat to the sustainability of financial services due to its environmental impact.
Facebook has faced an uphill task bringing regulators onboard with its Diem payment system, even after pouring millions into lobbying and rebranding efforts.
The Office of the Attorney General received a Freedom of Information Law (FOIL) request at the end of June, demanding material associated with the settlement agreement reached between the NYAG and Tether/Bitfinex.
The fact that billions in fresh capital allegedly continue to pour into Tether’s coffers despite the looming threat of more legal action will only fuel skepticism surrounding the existence of the fiscal reserves backing USDT.
America appears determined to bring an end to the digital currency sector’s ‘wild west’ phase, signalling a fundamental realignment with serious implications for the current market leaders.
Circle, one of the two companies behind the USDC stablecoin, has just announced that it will become a full-reserve national commercial bank.
The jig may be up for the Tether stablecoin following a trainwreck CNBC interview and regulators losing patience with the digital currency sector’s aversion to oversight.
