Meta’s former stablecoin project, Diem, which initially launched in 2019 as Libra, ended after significant political and regulatory hurdles in the US, according to Diem co-founder David Marcus.
Marcus made the revelations in a recent social media post, describing the challenges that led to the project’s termination as heavily influenced by political considerations.
Regulatory and political pushback
Libra was initially seen as a global payments network backed by a basket of international currencies. The project received early support from major financial companies such as Visa, MasterCard and PayPal.
However, the announcement sparked scrutiny from US lawmakers and regulators, who raised concerns about its potential impact on monetary sovereignty, financial stability and Meta’s broader influence in the global financial system.
Shortly after its introduction, Meta executives, including Marcus, testified before Congress to address concerns about the project. Lawmakers pointed to risks to state currencies and cited Meta’s history of privacy controversies as additional challenges to public trust. These concerns led to the withdrawal of key early supporters and prompted Meta to rename the project to Diem in 2020.
Despite the rebranding and attempts to scale back ambitions, including shifting focus to a US dollar-backed stablecoin and moving operations to the US, regulatory challenges remained. Marcus revealed that while early conversations with Federal Reserve officials suggested the possibility of limited approval, subsequent political conditions made progress difficult.
According to Marcus:
“There was no longer any legal or regulatory angle for the government or regulators to terminate the project. It was 100% a political murder – a murder carried out through the intimidation of captive banking institutions.”
Attempts to turn and conclude
The Diem Association partnered with Silvergate Capital to launch a dollar-denominated stablecoin. However, in late 2021, a letter from US senators urged Meta to halt its Novi digital wallet pilot program, citing unresolved regulatory and consumer protection concerns.
In January 2022, the Diem Association announced the sale of its assets to Silvergate, marking the end of the project. Stuart Levey, then CEO of Diem, attributed the decision to an inability to address regulatory challenges despite significant efforts to address compliance and security risks.
Following the closure of Diem, many team members moved to other blockchain initiatives, including Aptos and Sui. Marcus has since focused on Lightspark, a company exploring the use of Bitcoin’s Lightning Network for payments.
Reflecting on Diem’s journey, Marcus emphasized the importance of neutrality and decentralization when building future blockchain projects. The company’s history illustrates the interplay between innovation, policy and regulation in the crypto industry.