Facebook’s ambitious 2019 crypto stablecoin project never went live. On the other hand, it sure left a permanent impression. This function is part of our CoinDesk Turns 10 series looking at the largest stories in cryptocurrency history.
Facebook’s Libra crypto stablecoin was going to let anyone, anywhere, transact money over the internet. A basket of fiat currencies would secure Libra’s price stability, while a group of 28 varied corporations would oversee the project.
Libra users wouldn’t 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 digital currencies with the can potentially of Facebook’s 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 crypto stablecoin, a lot of its partners and even its name in a bid to launch something, anything.
In the 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 metaverse 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 several enduring legacies from its 958 days of existence: Legislative efforts worldwide have been born in reaction to Libra, and cryptocurrency more traditionally received a substantial increase in mainstream understanding. And, of course, there’s the technology underpinning the project. As of press time, there’s numerous projects launched by previous Meta employees and using Libra ( thereafter Diem)’s technology.
What went wrong
The project may have been doomed from the start, largely owing to its association with Facebook, which, at the time, was fresh off the Cambridge Analytica scandal.
Almost instantly after it was announced, lawmakers around the globe were calling for hearings and investigations.
“I think Libra was met with a giant overreaction around the world,” stated Dante Disparte, who was the Libra Association’s head of policy and communications in June 2019. He is now the chief strategy officer at crypto stablecoin issuer Circle Internet Financial.
Libra sought permission rather than forgiveness, Disparte stated, echoing comments made by both Zuckerberg and David Marcus (one of Libra’s creators) during the project’s early days.
“We’re committed to getting all of the appropriate United States approvals before launching the Libra payment system in any country in the world, even where those approvals can potentially not be strictly required,” Zuckerberg informed Congress in October 2019. “All of the regulatory authorities that have jurisdiction over a part of what we’re doing, we’re working with them and we’ll seek approval.”
I think Libra was met with a giant overreaction around the world
Regulatory authorities appeared loath to provides that permission. Nor were policymakers reassured by the Libra Association’s oversight of the project, seeing it as a Trojan Horse for Facebook’s 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 Coinbase Crypto exchange and Xapo, to Anchorage and Andreessen Horowitz.
“ And 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,” Disparte said.
Instead, lawmakers went so far as to warn some of the payments corporations taking part in the Libra project that they could be subject to greater regulatory scrutiny. In the end, corporations like Visa and Mastercard and PayPal withdrew before the Libra Association was even formally instituted.
Disparte felt underprepared for the fight. “We were armed with little greater than a white paper that talked about an idea,” he said.
Within months of Facebook announcing that white paper, there were 3 different full Congressional committee hearings focused in particular on Libra.
“ In the end, that was a split screen moment that was replicated all over the world,” Disparte said.
Libra was formally announced in 2019, but speculation of its imminent launch had been circulating for 6 months, and Facebook’s engagement in blockchain tech and cryptocurrency technology had been known for well over a year.
Regardless of this, Facebook kept mum about what exactly it was working on, leaving reporters to speculate according 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 Libra’s leaders ahead of the big reveal.
“It was super secret. Everyone was so excited in relation to this thing. There had been these dribs and drabs of reports according to sources, but this was the official revealing of what had really been under wraps,” he informed me.
In the heart of Silicon Valley, Seward was able to hear directly about the project with other CoinDesk editors listening in.
“They shared the technical documentation and the white paper, the grand vision for what this was going to accomplish,” he stated. “ And 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?”
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 Bitcoin (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 project’s governing council, though that body did not want immediate press coverage.
For a crypto token that never launched, Libra still leaves a substantial legacy.
Facebook’s involvement helped mainstream the idea of digital currency, propelling what at the time was a relatively staid bear market into broader public awareness.
“It 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,” Seward said.
Many of people were asking what Libra was, which as a result drew them to the question of what cryptocurrency was well before it became an everyday term.
Cryptocurrency “popped onto the public’s radar in a way that it hadn’t before,” Seward stated. “It was one of those 1st ‘Oh, wait, this Web 3.0 thing, smart people in Silicon Valley are thinking in relation to this. OK, we better start thinking in relation to this, too.”
And lawmakers started talking more about cryptocurrency than they had before. Libra inspired numerous legislative bodies to begin introducing and passing legislation addressing the cryptocurrency ecological system, and it spurred more action from some regulatory authorities and central banks on addressing the issues Libra sought to address, Disparte said.
There is no question that the very concept of monetary authority digital currencies (CBDCs) was mostly an abstraction pre-Libra, Disparte stated. And once, no country had launched a CBDC or was really thinking of digitizing its currency on a distributed ledger.
Now, greater than 100 central banks are studying CBDCs to some extent, he said.
Legislation was likewise drafted that would in particular address crypto stablecoins as its own subsector of the broader cryptocurrency ecosystem.
Disparte pointed to the European Union’s landmark Markets in Cryptocurrency Assets (MiCA) legislation, which is now – after years of debate and work – next to taking effect.
“It was a body of regulation born in response to the fear of big tech, and big tech particularly, entering the movement of money,” he stated. “And so in some ways, [Libra was] a project that was likewise a heat shield that took the brunt of the world’s policy responses and regulatory responses and public hearings.”
Ben Schiller and Nick Baker.