Former Libra Head Details Political Pressure That Ended Meta’s Digital Currency

TLDR

• Meta’s Libra project, aimed at creating a global digital payment network, was shut down due to political pressure rather than regulatory issues
• Treasury Secretary Janet Yellen warned Fed Chair Powell that supporting Libra would be “political suicide”
• The project had already addressed regulatory concerns and made multiple concessions by Spring 2021
• Federal Reserve used indirect pressure on banking institutions to end the project
• David Marcus, former Libra head, reveals this information after years of silence

Meta’s ambitious digital currency project Libra, which aimed to revolutionize global payments, met its end not through regulatory hurdles but through political pressure, according to recent revelations from David Marcus, the project’s former head.

The project, announced in 2019, started with strong backing from 28 companies, including major players like Visa, Mastercard, and PayPal. It promised to create a new digital currency that would make sending money across borders as simple as sending a text message.

From the beginning, Libra faced intense scrutiny. Marcus spent countless hours testifying before Congress, meeting with regulators, and working to address concerns about financial crime, money laundering, and consumer protection. The team made numerous changes to the original vision to satisfy regulatory requirements.

By spring 2021, after two years of modifications and discussions, the project had addressed every regulatory concern raised by authorities. Several members of the Federal Reserve’s Board of Governors supported a limited pilot program, and Fed Chair Jerome Powell appeared ready to allow the project to move forward.

However, according to Marcus’s account, shared recently on social media, the project’s fate was sealed during a bi-weekly meeting between Powell and Treasury Secretary Janet Yellen. During this meeting, Yellen allegedly warned Powell that supporting the project would be “political suicide” and that she would not support him if he allowed it to proceed.

The Federal Reserve then took action through indirect means. The Fed’s general counsel contacted participating banks individually, reading them a prepared statement: “We can’t stop you from moving forward and launching, but we are not comfortable with you doing so.”

This subtle but clear warning was enough to end the project. Banking partners, already operating in a heavily regulated environment, understood the implied consequences of continuing their support against the Fed’s wishes.

Marcus emphasizes that by this point, there were no legal or regulatory grounds left to stop the project. “It was 100% a political kill—one that was executed through intimidation of captive banking institutions,” he stated.

How Libra Was Killed.

I never shared this publicly before, but since @pmarca opened the floodgates on @joerogan’s pod, it feels appropriate to shed more light on this.

As a reminder, Libra (then Diem) was an advanced, high-performance, payments-centric blockchain paired with a…

— David Marcus (@davidmarcus) November 30, 2024

The project had undergone several transformations in its attempts to gain approval. Originally named Libra, it was rebranded as Diem and shifted its focus to a U.S. dollar-pegged stablecoin rather than its initial vision of a currency backed by a basket of international currencies.

These revelations come at a time when discussions about cryptocurrency regulation and central bank digital currencies are increasingly common. Marcus’s disclosures provide a rare glimpse into the complex relationship between traditional financial institutions, tech companies, and government regulators.

The story of Libra’s end follows other recent allegations about government pressure on financial institutions. Marc Andreessen, co-founder of venture capital firm Andreessen Horowitz, recently claimed that over 30 tech founders were “debanked” as part of an operation called Chokepoint 2.0.

Looking back, Marcus acknowledges that the project’s compromises may have undermined its original vision. “By the end of the project, we had made so many concessions to get a thumbs-up that the whole design of the network became a Frankenstein of our initial ambitions,” he wrote.

The team’s experience led them to conclude that any future attempts to build a global payment network would need to be built on neutral, decentralized systems. Marcus specifically pointed to Bitcoin as the most “unassailable network and asset” for such purposes.

The timeline of events shows a methodical process of regulatory compliance followed by political intervention. From its June 2019 announcement to the spring 2021 shutdown, the project teams worked continuously to address concerns and modify their approach.

Before its end, Libra had evolved substantially from its original concept. The project moved its operations to the United States and scaled back its global ambitions in favor of a more limited approach focused on U.S. dollar transactions.

For those involved, the project’s end marked a stark lesson in the challenges of introducing innovation to the financial sector. Despite meeting regulatory requirements, political considerations proved to be the decisive factor.

Marcus’s recent revelations come after years of silence about the project’s final days. The former Libra head shared these details on social media following public discussions about government involvement in financial technology.

The most recent development in this story occurred when Marcus detailed these events on social media, providing the first public account of the specific political pressure that ended the project.