How Regulatory Pushback Derailed Facebook's Libra Global Payment Vision

‍Source: beincrypto

Compiled by: Blockchain Knight

David Marcus, former head of Facebook's Libra crypto project, recently revealed the reasons behind the project's failure.

According to Marcus, despite a solid project design and extensive regulatory consultations, regulatory pressure and withdrawal of support from partner institutions ultimately led to the project's termination.

On November 30, Marcus published a post on X detailing the sequence of events that led to Libra’s shutdown.

The blockchain-based payment system, later renamed Diem, aimed to revolutionize global payments by combining a high-performance blockchain with stablecoins.

However, Marcus stated that the project's collapse had little to do with legal or formal regulatory issues.

Rather, regulatory forces played a decisive role.

Marcus said: "Here's an important point worth noting—governments or regulators never killed this project from a legal or regulatory standpoint."

"This was 100% a regulatory conspiracy, primarily through intimidating the banks participating in the project."

Marcus revealed that Libra hit a roadblock immediately after its announcement in 2019. Although the team made adjustments and postponed the launch to 2021, regulatory opposition persisted.

Marcus emphasized that a turning point came when Federal Reserve Chair Jerome Powell shifted his stance after meeting with Treasury Secretary Janet Yellen.

He disclosed that Yellen labeled supporting Libra as "regulatory suicide," prompting the Federal Reserve to issue warnings to banks involved in the project.

It was reported that in these calls, the Fed's general counsel, expressing dissatisfaction with the project, warned banks against moving forward with Libra.

"The Fed called every participating bank. The Fed’s general counsel read each bank a pre-written statement saying, 'We can't stop you from moving forward and launching, but we are uncomfortable with you doing so.' And just like that, it was over."

Since then, figures in the crypto industry have voiced support for Marcus’s account.

Kathryn Haun, former Libra board member, and Tyler Winklevoss, co-founder of Gemini, both highlighted how regulatory motivations derailed Libra.

Winklevoss said: "Gemini worked closely with David and the Meta team to help launch Libra (a.k.a. Diem)."

"When federal regulators shut it down, we were on the same front line. It was purely regulatory—there was no legal basis whatsoever."

Reflecting on the experience, Marcus stressed the necessity of decentralization when building future financial systems.

He believes BTC is the ideal foundation for such networks, citing BTC's neutrality and tamper-resistant design.

Marcus concluded: "If you want to build an open monetary network for the world—one capable of transacting hundreds of billions of dollars daily and lasting 100 years—it must be built on the most neutral, decentralized, and tamper-proof network and asset available, and that is undoubtedly BTC."

Marcus’s revelations have intensified scrutiny within the crypto and tech communities regarding de-banking practices.

Recent allegations of regulatory-driven financial restrictions have sparked further debate on the intersection of U.S. regulation, oversight, and innovation.