Source: beincrypto
Compiled by: Blockchain Knight
David Marcus, the former head of Facebook’s Libra Crypto asset project, recently revealed the reasons for the project’s failure.
According to Marcus, despite the project's robust design and extensive regulatory consultation, regulatory pressure and divestment by supporting institutions led to the project's closure.
On November 30, Marcus published an article on X detailing the series of events that led to the demise of Libra.
This blockchain-based payment system, later renamed Diem, aims to revolutionize global payments by combining high-performance blockchain with stablecoins.
However, Marcus said the system's failure had little to do with legal or regulatory issues.
Instead, regulatory forces played a decisive role.
“It’s important to note here that there is no effort by the government or regulators to kill the project from a legal or regulatory perspective,” Marcus said.
“This is 100 percent a regulatory conspiracy, and the primary tactic is to intimidate the banks involved in this program.”
Marcus revealed that Libra encountered bottlenecks immediately after it was announced in 2019. Although the team made some adjustments and postponed the launch of the project to 2021, regulatory opposition still exists.
Marcus highlighted Federal Reserve Chairman Jerome Powell's shift in stance following a meeting with Treasury Secretary Janet Yellen as a turning point.
Marcus revealed that Yellen called supporting Libra "regulatory suicide," prompting the Federal Reserve to issue a warning to banks participating in the project.
During those calls, the Fed’s general counsel reportedly warned banks not to move forward with Libra, citing dissatisfaction with the project.
“The Fed called all the participating banks, and the Fed general counsel read a prepared statement to each bank saying, ‘We can’t stop you from moving forward and launching your project, but we’re not comfortable with you doing this.’ And that was it.”
Since then, people in the Crypto asset industry have supported Marcus's statement.
Former Libra board member Kathryn Haun and Gemini co-founder Tyler Winklevoss have both highlighted how regulatory motivations could derail Libra.
“Gemini worked closely with David and his Meta team to help launch Libra (aka Diem),” Winklevoss said.
“We were on the same page when federal regulators shot down this project. It was all regulatory and had no legal basis.”
Reflecting on this experience, Marcus stressed the need for decentralization when building future financial systems.
He believes that Bitcoin is an ideal foundation for such a network, citing its neutrality and tamper-proof design.
Marcus concluded: “If you want to build an open currency network for the world, on which trillions of dollars can flow every day and last for 100 years, you have to build it on the most neutral, decentralized, and tamper-proof network and asset, which is undoubtedly Bitcoin.”
Marcus’ revelations heighten scrutiny of “de-banking” in the crypto asset and technology sectors.
Recent allegations of regulatory-motivated financial restrictions have sparked further discussion about the intersection of regulation, oversight, and innovation in the United States.
