David Marcus, the former head of Facebook’s ambitious blockchain project Libra—later rebranded as Diem—has attributed the initiative’s failure to political resistance.
In a detailed post on X (formerly Twitter), Marcus stated that Libra’s collapse was “100% a political kill,” blaming regulators and government officials for derailing the project.
Libra’s Vision Blocked by Political Barriers
Launched with the goal of revolutionizing global finance, Libra aimed to introduce a stablecoin capable of seamless global transactions. However, the initiative encountered intense pushback from lawmakers and regulators worldwide.
Despite extensive revisions to its framework to address concerns, the project faced insurmountable political hurdles, leading to its sale to Silvergate Bank in 2022. Silvergate later abandoned the initiative, writing off its investment in 2023.
Key Figures Behind Libra’s Demise
Marcus highlighted the role of U.S. Treasury Secretary Janet Yellen in thwarting the project, even as it had backing from some Federal Reserve officials, including Chair Jay Powell.
“Janet Yellen warned Powell against allowing the project to continue, fearing political backlash. This effectively became the moment Libra was killed,” Marcus wrote.
The Federal Reserve reportedly organized calls with banks involved in the project, discouraging them from offering support.
Regulatory Concerns and Economic Risks
A November 2021 report from the President’s Working Group on Financial Markets raised concerns about Facebook’s dual role as a stablecoin issuer and a commercial entity. The report warned of potential risks to the financial system, emphasizing fears of economic power concentration.
These factors, coupled with heightened scrutiny, sealed Libra’s fate.
The Aftermath: Legacy and Evolution
Following Libra’s collapse, many of its team members transitioned to other blockchain projects:
- Aptos and Sui, two Layer 1 blockchains, were developed using Facebook’s proprietary Move programming language.
- David Marcus founded Lightspark, a startup focusing on Bitcoin’s Lightning Network.
While Libra’s vision of a global stablecoin failed, its technological and conceptual influence continues to shape the blockchain landscape.
Regulatory Shifts Under Trump Administration
The upcoming administration of Republican President-elect Donald Trump may bring a shift in cryptocurrency regulation. Legal experts anticipate a reduction in enforcement actions against the crypto industry, with regulatory priorities focusing elsewhere, such as immigration.
Scott Hartman, co-chief of the Securities and Commodities Task Force at the U.S. Attorney’s Office in Manhattan, confirmed that fewer resources would be dedicated to crypto-related enforcement.
The SEC has been under fire for its “regulation-by-enforcement” strategy, with critics urging the agency to establish a clear regulatory framework for cryptocurrencies rather than targeting industry players through lawsuits.
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