The co-creator of Meta’s ill-fated crypto payment project Libra says a political hit job stymied their efforts.
David Marcus says Libra, later renamed Diem, would have “solved global payments at scale.”
The tech executive notes his team spent months briefing “key regulators” in the US and abroad prior to announcing the project in June 2019 alongside 28 other companies.
“Two weeks later, I was called to testify in front of both the Senate Banking Committee and the House Financial Services Committee, which was the starting point of two years of nonstop work and changes to appease lawmakers and regulators.
By spring of 2021 (yes they slow-played us at every step), we had addressed every last possible regulatory concern across financial crime, money laundering, consumer protection, reserve management, buffers, and so much more, and we were ready to launch.
We had worked on a slow rollout of a limited pilot that some members of the Fed’s Board of Governors were supportive of. At last, Chair Jay Powell was ready to let us move forward in a limited way. The story, as I heard it, is that Jay Powell was told by Treasury Secretary Janet Yellen at one of their biweekly meetings that allowing this project to move forward was ‘political suicide,’ and she would not have his back if he let it happen. I wasn’t in the room when this conversation happened, so take these words with a grain of salt, but effectively this was the moment Libra was killed.”
Marcus claims the U.S. Federal Reserve then told banks participating in the Libra project that it wasn’t comfortable with their involvement.
“There was no legal or regulatory angle left for the government or regulators to kill the project. It was 100% a political kill – one that was executed through intimidation of captive banking institutions.”
The Diem Association shuttered in early 2022 and sold off its intellectual property and other assets to Silvergate Capital Corporation, a bank that itself shut down the following year.
Marcus now serves as the chief executive of Lightspark, a startup that aims to build Bitcoin (BTC)-based enterprise payment solutions.
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