How Politics Killed Facebook’s Libra Project
Political pressure, not regulations, crushed Facebook's Libra, with U.S. officials warning banks it was "political suicide" to support the project.
David Marcus, the former leader of Facebook’s Libra cryptocurrency project, has shed light on the reasons behind the initiative’s failure, pointing to political opposition rather than legal or regulatory challenges. His comments reveal how intense political pressures and the debanking of supporting institutions ultimately dismantled Libra, later rebranded as Diem.
Announced in 2019, Libra aimed to transform global payments with a stablecoin backed by a cutting-edge blockchain. Despite its potential and extensive efforts to address regulatory concerns, the project was met with immediate resistance. Marcus shared that political forces were the decisive factor, stating, “There was no legal or regulatory issue left for regulators to use against us. It was a 100% political kill, executed through intimidation of captive banks.”
Marcus highlighted key events that led to the project's collapse. Initially postponed to address concerns, Libra faced unwavering political hostility. A major turning point came after a meeting between Federal Reserve Chair Jerome Powell and Treasury Secretary Janet Yellen. According to Marcus, Yellen described supporting Libra as “political suicide.” This prompted the Federal Reserve to caution banks involved with the project. Banks reportedly received calls from the Fed's general counsel, warning, “We can’t stop you from launching, but we’re not comfortable with it.” These warnings effectively ended the initiative.
Marcus also revealed that this political resistance had broader implications. Kathryn Haun, a former Libra board member, and Tyler Winklevoss, co-founder of Gemini, supported his account. Winklevoss described how Federal regulators halted the project despite its near readiness, stating, “It was all politics, no legal basis.”
Reflecting on this experience, Marcus emphasized the importance of decentralization in future financial systems. He argued that truly global monetary networks need to be built on neutral, tamper-proof systems like Bitcoin, saying, “If you want to build an open monetary network for the world—designed to move trillions daily and last for a century—it must be based on the most decentralized and neutral asset: Bitcoin.”
Marcus’s revelations have reignited debates about political interference in innovation, particularly in the cryptocurrency sector. Claims of “debanking” and politically motivated financial restrictions continue to raise questions about the balance between regulation, politics, and technological progress.
