David Marcus, the former head of Facebook’s blockchain project Libra—later rebranded as Diem—has revealed that political opposition ultimately doomed the ambitious stablecoin initiative.
In a detailed post on X, Marcus labeled the project’s demise as “100% a political kill,” citing behind-the-scenes maneuvering by regulators and government officials.
Initially launched with the goal of revolutionizing global finance, Libra faced significant resistance from lawmakers and regulators worldwide.
Libra Sold to Silvergate Bank in 2022
Despite substantial modifications to address concerns, the project was unable to overcome political obstacles.
In January 2022, the initiative was sold to Silvergate Bank, which abandoned it a year later, writing off its investment.
Marcus detailed how opposition from key figures, particularly Treasury Secretary Janet Yellen, played a pivotal role.
He claimed that despite support from some Federal Reserve governors, including Chair Jay Powell, Yellen’s resistance marked the project’s turning point.
“Janet Yellen warned Powell against allowing the project to continue, fearing political backlash,” Marcus wrote. “This effectively became the moment Libra was killed.”
He also described how the Federal Reserve subsequently organized calls with participating banks, discouraging them from supporting the initiative.
How Libra Was Killed.
I never shared this publicly before, but since @pmarca opened the floodgates on @joerogan’s pod, it feels appropriate to shed more light on this.
As a reminder, Libra (then Diem) was an advanced, high-performance, payments-centric blockchain paired with a…— David Marcus (@davidmarcus) November 30, 2024
The broader regulatory landscape also added pressure.
Politico reported that Facebook’s dual role as a stablecoin issuer and a commercial entity alarmed regulators, who warned of potential economic power concentration.
In a November 2021 report, the President’s Working Group on Financial Markets stressed that this combination could pose significant risks to the financial system.
The fallout from Libra’s collapse saw many of its former staff move on to other blockchain ventures.
Key team members joined projects like Aptos and Sui, two Layer 1 blockchains utilizing the Move programming language developed by Facebook for Libra.
Marcus himself has since launched Lightspark, a startup focused on enhancing Bitcoin’s Lightning Network.
The story of Libra highlights the challenges of introducing disruptive technologies within a heavily regulated financial ecosystem.
While its vision of a stablecoin transforming global finance may have ended prematurely, its legacy continues to influence new blockchain projects.
US Crypto Owners Expect More Regulation
Cryptocurrency enforcement in the United States may ease under the upcoming administration of Republican President-elect Donald Trump, with regulatory priorities expected to shift.
Speaking at a legal conference in New York, current and former senior government lawyers indicated that while financial fraud cases will still be pursued, the Justice Department’s focus will likely move toward immigration enforcement, a key campaign promise of Trump.
Scott Hartman, co-chief of the securities and commodities task force at the U.S. Attorney’s Office in Manhattan, revealed that fewer resources will be allocated to policing cryptocurrency crimes.
As of late, the SEC has been facing growing criticism due to its “regulation-by-enforcement” approach to the crypto industry.
Critics argue that the SEC has failed to establish a clear regulatory framework for cryptocurrencies, opting instead to pursue legal action against key industry players.
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