Facebook and Coinbase Partnership Sparks Controversy
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Facebook and Coinbase Partnership Sparks Controversy

6mo ago

The social network is tapping the trading platform as it seeks to launch a pilot of its new Novi crypto wallet.

Facebook and Coinbase Partnership Sparks Controversy

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Facebook has entered into a partnership with Coinbase as it seeks to launch a pilot of its new Novi crypto wallet.

The tech giant hopes this new product will enable people to send and receive funds abroad in an instant and secure way, all while incurring zero fees.

However, the announcement instantly triggered a fierce pushback from a number of U.S. politicians.

In a strongly worded letter, five Democratic senators wrote:

“Time and again, Facebook has made conscious business decisions to continue with actions that have harmed its users and the broader society. Facebook cannot be trusted to manage a payment system or digital currency when its existing ability to manage risks and keep consumers safe has proven wholly insufficient.” 

The social network’s practices were recently thrown into the spotlight once again after a whistleblower claimed that its algorithms sow divisiveness in society — and Instagram exacerbates eating disorders and body image issues in teenage girls.

A Long Time Coming

Facebook first announced plans to launch a cryptocurrency called Libra — and a wallet called Calibra — back in 2019. But politicians and central banks around the world quickly shot back, amid concerns that this digital asset could cause financial instability.

It’s fair to say that the barrage of criticism took the tech giant by surprise, and as a result, the company went back to the drawing board — later issuing a watered-down version of its white paper.

Both of its products later underwent rebrands. Libra became Diem, while Calibra became Novi. 

There has been speculation that Facebook would intend to quietly ditch the product, but this latest pilot indicates that it’s full steam ahead.

Given how Facebook has 2.8 billion users — and sister platforms WhatsApp and Instagram have 2 billion and 1.4 billion users respectively — concerns have been raised that Diem could undermine sovereign currencies such as the U.S. dollar and the euro. 

The social network could also provide stiff competition for central bank digital currencies.

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