Meta Abandons Libra Cryptocurrency Project Amid Regulatory Pressure

Meta Platform Inc. is abandoning its Libra cryptocurrency project due to regulatory pressure, according to a Bloomberg report. The Diem Association, which oversees Meta’s cryptocurrency initiative, is exploring the sale of its assets to return value to investors and settle engineers who worked on the project.

Meta’s Libra Cryptocurrency Journey

In 2019, Meta (then known as Facebook) announced plans to launch Libra, marking its expansion into the global payments sector. The cryptocurrency was backed by real assets, which meant it would not have the volatility typically seen in cryptocurrency markets. Facebook partnered with 28 organizations to form the Libra Association, a governing body for the digital coin. Major partners included Coinbase, MasterCard, Visa, Stripe, and PayPal.

The project faced immediate regulatory concerns. Various governments expressed concerns that Libra could pose a threat to their monetary economies. In response, the project’s vision was scaled down: instead of a stablecoin backed by a basket of global fiat currencies, it was restructured into individual coins backed by single national currencies.

This shift prompted several founding members to exit the partnership. PayPal, MasterCard, Vodafone, and eBay withdrew their support from the initiative.

Regulatory Obstacles and Project Setbacks

Regulatory scrutiny intensified over concerns about Meta’s involvement. Analysts noted that Zuckerberg and Facebook’s reputation, particularly following multiple privacy scandals, contributed significantly to Libra’s critics’ opposition.

In September 2021, Facebook launched a pilot of its digital currency wallet, Novi, in the United States and Guatemala. However, U.S. Senators immediately called on Facebook to end its digital wallet and cryptocurrency project, stating that the company could not be trusted to manage cryptocurrency. The group of regulators expressed concern that if a tech company’s vast user network began transacting in a new currency, it “could lead to an excessive concentration of economic power.”

Two months after the Novi pilot launch, Meta’s crypto lead David Marcus—a co-founder of Diem—resigned from his position.

According to the source report, Silvergate Bank, which was designated as the issuer of the coin, bowed to pressure from the U.S. Federal Reserve, which was uneasy with the plan.

Project Wind-Down and Future Uncertainty

The lengthy regulatory battle between Meta and government agencies appears to be concluding as Meta winds down the project. The Diem Association is now seeking to sell its intellectual property and determine how to compensate the engineers involved in the development.

However, it remains unclear how a potential buyer would value Diem’s intellectual property or the engineering talent behind it. According to the source, discussions are in early stages, and there is no guarantee that Diem will find a buyer.