Facebookโs ambitious 2019 cryptoย stablecoin project never went live. Onย theย otherย hand, it sure left aย permanent impression. Thisย function is part of our CoinDesk Turns 10 series looking at the largest stories in cryptocurrency history.
Facebookโs Libra cryptoย stablecoin was going to let anyone, anywhere, transact money over the internet. A basket of fiat currencies would secure Libraโs price stability, while a group of 28 varied corporations would oversee the project.
Libra users wouldnโt even must have a Facebook account to send money, the social media giant revealed in 2019. Libra, it seemed at the time, had potential to reshape cross-border remittances and international commerce. Conceptually, it combined the promise of digitalย currencies with the canย potentially of Facebookโs awesome social media network.
Instead, legislators worldwide led a backlash against the project, forcing Facebook and its partners to shed its plans for a dividend token, the basket of assets to back the cryptoย stablecoin, aย lotย of its partners and even its name in a bid to launch something, anything.
Inย theย end, the remnants of the project were sold off to Silvergate Bank (which shuttered its doors earlier this year), having launched a single (now-defunct) wallet project and not much else. Facebook, the driving force behind Libra, rebranded to Meta and refocused its efforts on the metaverseย network, a virtual world effort (which itself is struggling). The numerous other payments, telecommunications and other corporations that were part of the original coalition have gone back to their normal enterprises, though some remain active in the cryptocurrency sector.
Nevertheless the project itself never took off, it managed to leave severalย enduring legacies from its 958 days of existence: Legislative efforts worldwide have been born in reaction to Libra, and cryptocurrency moreย traditionally received a substantial increaseย in mainstream understanding. And, ofย course, thereโs the technology underpinning the project. As of press time, thereโs numerous projects launched by previous Meta employees and using Libra ( thereafter Diem)โs technology.
What went wrong
The project may have been doomed from the start, largely owingย to its association with Facebook, which, at the time, was fresh off the Cambridge Analytica scandal.
Almost instantly after it was announced, lawmakers aroundย theย globe were calling for hearings and investigations.
โI think Libra was met with a giant overreaction around the world,โ stated Dante Disparte, who was the Libra Associationโs head of policy and communications in June 2019. He is now the chief strategy officer at cryptoย stablecoin issuer Circle Internet Financial.
Libra sought permission rather than forgiveness, Disparte stated, echoing comments made by both Zuckerberg and David Marcus (one of Libraโs creators) during the projectโs early days.
โWeโre committed to getting all of the appropriate Unitedย States approvals before launching the Libra payment system in any country in the world, even where those approvals canย potentially not be strictly required,โ Zuckerberg informed Congress in October 2019. โAll of the regulatoryย authorities that have jurisdiction over a part of what weโre doing, weโre working with them and weโll seek approval.โ
I think Libra was met with a giant overreaction around the world
Regulatoryย authorities appeared loath to provides that permission. Nor were policymakers reassured by the Libra Associationโs oversight of the project, seeing it as a Trojan Horse for Facebookโs ultimate control.
A number of payment tech heavyweights were founding members of the Libra Association, including Visa, Mastercard, PayPal, Uber, Lyft, Mercado Pago, Booking Holdings, eBay, Stripe, Vodafone and Kiva.
Cryptocurrency members ranged from Coinbaseย Cryptoย exchange and Xapo, to Anchorage and Andreessen Horowitz.
โ Andย once the Libra project showed up, the personal calculus I had was it would be a project that would change the world, and if nothing else, change the arc of the conversation,โ Disparte said.
Instead, lawmakers went so far as to warn some of the payments corporations takingย partย in the Libra project that they couldย be subject to greater regulatory scrutiny. Inย theย end, corporations like Visa and Mastercard and PayPal withdrew before the Libra Association was even formally instituted.
Disparte felt underprepared for the fight. โWe were armed with little greaterย than a white paper that talked about an idea,โ he said.
Within months of Facebook announcing that white paper, there were 3 different full Congressional committee hearings focused inย particularย on Libra.
โ Inย theย end, that was a split screen moment that was replicated all over the world,โ Disparte said.
Secrecy
Libra was formally announced in 2019, but speculation of its imminent launch had been circulating for 6 months, and Facebookโs engagementย in blockchainย tech and cryptocurrency technology had been known for well over a year.
Regardlessย of this, Facebook kept mum about what exactly it was working on, leaving reporters to speculate accordingย to what little information was available.
Zack Seward, who was an editor at CoinDesk in 2019, flew out to Menlo Park, California, for private briefings from Facebook executives and Libraโs leaders ahead of the big reveal.
โIt was super secret. Everyone was so excited inย relationย toย this thing. There had been these dribs and drabs of reports accordingย to sources, but this was the official revealing of what had really been under wraps,โ he informed me.
In the heart of Silicon Valley, Seward was able to hear directly about the project with other CoinDesk editors listening in.
โThey shared the technical documentation and the white paper, the grand vision for what this was going to accomplish,โ he stated. โ Andย once, we were most interested in all these big, giant corporate partners that were involved. They put up money to secure this network, and they would lend this thing legitimacy, right?โ
The project was complex enough that CoinDesk ended up publishing 5 different stories in quick succession covering the dividend token, a hint at a digital identity project, showing how the technical issues borrowed from Bitcoinย (BTC) and Ethereum, exploring the white paper and the notice itself.
The project remained shrouded in secrecy, nevertheless. In October 2019, this reporter flew to Geneva, Switzerland, to cover the formal creation of the projectโs governing council, though that body did not want immediate press coverage.
Legacy
For a cryptoย token that never launched, Libra still leaves a substantial legacy.
Facebookโs involvement helped mainstream the idea of digitalย currency, propelling what at the time was a relatively staid bear market into broader public awareness.
โIt was June 2019, so this was in the doldrums of the last bear market prior to the mania of 2021, where cryptocurrency went mainstream. And this was kind of like the 1st time cryptocurrency went mainstream a little bit,โ Seward said.
Manyย of people were asking what Libra was, which asย aย result drew them to the question of what cryptocurrency was well before it became an everyday term.
Cryptocurrency โpopped onto the publicโs radar in a way that it hadnโt before,โ Seward stated. โIt was one of those 1st โOh, wait, this Webย 3.0 thing, smart people in Silicon Valley are thinking inย relationย toย this. OK, we better start thinking inย relationย toย this, too.โ
And lawmakers started talking more about cryptocurrency than they had before. Libra inspired numerous legislative bodies toย begin introducing and passing legislation addressing the cryptocurrency ecologicalย system, and it spurred more action from some regulatoryย authorities and central banks on addressing the issues Libra sought to address, Disparte said.
Thereย is no question that the very concept of monetaryย authority digitalย currencies (CBDCs) was mostly an abstraction pre-Libra, Disparte stated. Andย once, no country had launched a CBDC or was really thinking of digitizing its currency on a distributed ledger.
Now, greaterย than 100 central banks are studying CBDCs to some extent, he said.
Legislation was likewise drafted that would inย particularย address cryptoย stablecoins as its own subsector of the broader cryptocurrency ecosystem.
Disparte pointed to the European Unionโs landmark Markets in Cryptocurrency Assets (MiCA) legislation, which is now โ after years of debate and work โ nextย to taking effect.
โIt was a body of regulation born in response to the fear of big tech, and big tech particularly, entering the movement of money,โ he stated. โAnd so in some ways, [Libra was] a project that was likewise a heat shield that took the brunt of the worldโs policy responses and regulatory responses and public hearings.โ
Ben Schiller and Nick Baker.
