Meta’s cryptocurrency ploy all but dead with Libra/Diem seeking to sell assets

[Hydrogen]

Stablecoin raised concerns of “excessive concentration of economic power.”

After years of effort, Meta’s cryptocurrency initiative has collapsed under the weight of regulatory scrutiny.

The Diem Association, formerly known as the Libra Association, is considering selling its assets and returning money to investors, according to a Bloomberg report. There’s not much to sell, though. The company doesn’t have much in the way of physical assets—just some intellectual property. Perhaps the most valuable part of the association is its engineers. Diem is reportedly looking for a “new home” for them.

Mark Zuckerberg first announced the project in 2019, back when his company was named Facebook and the project was named Libra. He said the cryptocurrency would serve as the foundation for payments within Facebook Messenger and WhatsApp. Zuckerberg managed to convince dozens of companies to become founding members of the backing organization, including Visa, MasterCard, Uber, Lyft, eBay, Spotify, and Andreessen Horowitz.

Libra was to be managed via blockchain, with member organizations processing and verifying transactions. Originally, it was planned to be backed by conventional currencies and other stable assets, making it a so-called stablecoin. (Eventually, though, that scope was reduced to focus on the US dollar alone.)

Almost immediately, Libra ran into headwinds. Regulators questioned the distributed nature of the project and how the company would police activity on the network. Facebook adjusted, making the Libra Association responsible for compliance with financial laws, including money laundering and terrorist financing.

Within months, though, the association lost Visa, MasterCard, Stripe, and eBay from its ranks.

Still, the project soldiered on, making tweaks here and there and changing its name to Diem. Yet, none of those moves addressed the key problem, which was that Libra/Diem concentrated economic power in the hands of member companies.

“The combination of a stablecoin issuer or wallet provider and a commercial firm could lead to an excessive concentration of economic power,” the President’s Working Group on Financial Markets said in a November report. “This combination could have detrimental effects on competition and lead to market concentration in sectors of the real economy.” In other words, stablecoins like Libra/Diem could create systemic risks to the economy, making companies like Meta/Facebook and its partners too big to fail.

The final nail in the coffin came when Federal Reserve officials said they weren't sure if they would allow the bank affiliated with the project to issue the stablecoin. Libra/Diem, faced with the specter of a regulatory crackdown, had reached the end of the road.

Meta still owns about a third of the Diem Association, according to the Bloomberg report. Other members were supposed to pay in, though it’s not clear how many—if any—did.

https://arstechnica.com/tech-policy/2022/01/metas-cryptocurrency-plans-all-but-dead-with-libra-diem-looking-to-sell-assets/

....


It would appear the only feature of the metaverse that I liked has been canceled.

Respect to Mark Zuckenberg for holding out against what must have been overwhelming pressure to cancel libra/diem for as long as he did.

I wonder if the public seeing libra/diem be canceled this way could generate sympathy or a shift for Zuckenberg's public image. Which hasn't been great for a long time. Considering Elon Musk's offer to buy facebook so he can delete it as a public service.

[adaseb]

So the Libra is actually cancelled? I remember hearing about it years ago and it was even discussed on the radio that Facebook was going to launch a cryptocurrency. And Facebook being big, I assumed it would over come their regulatory issues.

I am not surprised however because there is just way too much regulation in the way.
And being new technology the government doesn’t want the Libra to be used for illegal activities. Even though cash is being used for illegal activities all the time.

[hatshepsut93]

Facebook is the last company that deserves to run a financial service. I view their push for a stablecoin as a continuation of their previous efforts to harvest financial data of people. Whatever were the motives of regulators who rejected Libra, I'm glad they did it.

I wonder if the public seeing libra/diem be canceled this way could generate sympathy or a shift for Zuckenberg's public image.

Of course not, why would it happen? Do you think people are going to pity a billionaire because one of his privacy-invasion projects has been stopped by the "evil anti-freedom government"?

[merchantofzeny]

I'd play the smallest violin if I can. I don't exactly trust the company but props for pushing till the end.

I am not surprised however because there is just way too much regulation in the way.
And being new technology the government doesn’t want the Libra to be used for illegal activities. Even though cash is being used for illegal activities all the time.

That's government for you. Of course they're gonna complain it's going to be used for illegal activities - coz they're not in charge of it.

Of course not, why would it happen? Do you think people are going to pity a billionaire because one of his privacy-invasion projects has been stopped by the "evil anti-freedom government"?

Hard to feel sympathy when you see vids of him refusing to enter his car until the door was opened for him LOL.

[sunsilk]

I thought that Libra has already been stopped when the congress starts to call out Mark and addressed some issues then, later on, he has launched or renamed the project into Diem and hired professionals that are knowledgeable in blockchain.

So, Meta's metaverse project which I've seen is likely they're going to continue instead of this stable coin that they are trying to develop. And from the very start, those companies that have cut their ties to the project probably have seen already some internal issues with the project's management.

[Ozero]

This is not just a matter of stablecoin circulation. There is a question of power here. Regulators allow others to create stablecoins. But Zuckerberg swung at something more. He wanted to bring his Libra/Diem to Facebook. The regulators immediately said that they would not allow this to happen, since too much private information about several billion people who use Facebook, and even their financial activities, would be concentrated in the private hands of Zuckerberg. When a few years ago the finance ministers of the European Union countries announced that they would not allow Libra to circulate in their countries, even then it was possible to put an end to this project. But Zuckerberg has been maneuvering and looking for a way out of this situation for so long. And finally gave up. Which is to be expected.

[dothebeats]

There's a lot of things going on with Libra and regulators would simply not allow it. Zuckerberg and his company has already been targeted for a lot of things since they are trying to play untouchables with people's information. They have been connected with numerous privacy breaches, and them handling a financial tool/service/whatever simply just doesn't sit well with what they are already doing. Props to them for trying, but if Libra/Diem doesn't have a place in the crypto world.