Meta's blockchain payment project Diem was shut down because of intense political intimidation from US regulators, according to a recent disclosure by its former head, David Marcus.
Feeling prompted to share his side after Marc Andreessen's appearance on The Joe Rogan Experience podcast, Marcus posted on X, "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".
Started in June 2019, Diem, previously called Libra, was designed to build a decentralized payment network using a stablecoin tied to the US dollar. The project had backing from Marcus' previous companies—PayPal and Visa.
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Despite the strong start, the project quickly ran into trouble. Just two weeks after announcing it, Marcus was called to testify before the House Financial Services Committee and the Senate Banking Committee. This marked the beginning of nonstop efforts to address lawmakers' and regulators' concerns.
Jerome Powell, the Chair of the Federal Reserve, appeared willing to allow the project to advance after Marcus tackled issues like money laundering and consumer protection.
However, according to Marcus, Treasury Secretary Janet Yellen intervened, suggesting that the project would be "political suicide" for Powell if it continued.
Meta decided to abandon Diem in early 2022, selling its intellectual property and assets to Silvergate Capital, because the Federal Reserve reportedly informed some banks of their involvement in Diem.
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We also learned the biggest lesson of all, which is that if you’re trying to build an open money grid for the world—eventually moving trillions of dollars a day, designed to be here 100 years from now—you have to build it on the most neutral, decentralized, unassailable network and asset, which, hands down, is Bitcoin.
The collapse of Diem highlights the tension between innovation and regulatory hurdles in the financial world. But it’s not the only case—crypto founders are pushing back against what many call "Operation Chokepoint 2.0". How are they fighting back against banking bans? Read the full story.
