According to Cointelegraph, the former head of Meta's blockchain payments initiative, Diem, has disclosed that the project was terminated due to overwhelming political pressure from United States regulators. David Marcus, a co-creator of Diem, stated in a post on November 30 that the project was halted not due to legal or regulatory issues but as a result of political maneuvers and intimidation directed at banking institutions involved with the project.
Diem, initially launched as Libra in June 2019, aimed to establish a decentralized payments network supported by a stablecoin integrated with the US dollar. The project garnered backing from major financial entities such as Visa and PayPal, where Marcus previously held the position of President. Marcus, who now leads Lightspark, a company focusing on Bitcoin and the Bitcoin layer 2 Lightning Network, remarked that Diem had the potential to revolutionize global payments on a large scale.
Shortly after the project's announcement, Marcus was summoned to testify before the Senate Banking Committee and the House Financial Services Committee. This marked the beginning of continuous efforts to address the concerns of lawmakers and regulators. Despite addressing issues related to money laundering and consumer protection, the project faced significant hurdles. Federal Reserve Board of Governors Chair Jerome Powell was reportedly prepared to allow the project to proceed in a limited capacity. However, Treasury Secretary Janet Yellen allegedly warned that permitting the project to advance would be "political suicide."
The final blow came when the Federal Reserve reportedly expressed discomfort with banks participating in the project. Consequently, Meta abandoned the Diem project in early 2022, selling its intellectual property and assets to Silvergate Capital. Silvergate later entered voluntary liquidation in March 2023 and filed for bankruptcy in September.
Marcus felt compelled to share these insights following a discussion by Marc Andreessen, a founder of venture capital firm Andreessen Horowitz, on political pressures faced by the industry during an episode of The Joe Rogan Experience podcast. Reflecting on the experience, Marcus emphasized the importance of building financial systems on neutral and decentralized networks, identifying Bitcoin as the ideal foundation for such endeavors. He concluded that for a global open money grid to succeed, it must be built on a robust and unassailable network like Bitcoin.
