How regulatory resistance is crushing Facebook Libra's vision of global payments

David Marcus, former head of Facebook's Libra Crypto asset project, recently revealed the reasons for the project's failure.

According to Marcus, despite the project's robust design and extensive regulatory consultation, regulatory pressure and withdrawal of funding from supporting institutions led to the project's cessation.

On November 30, Marcus published an article on X detailing the series of events that led to the termination of Libra.

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

However, Marcus said the system's failure had little to do with legal or regulatory issues.

Instead, regulatory forces played a decisive role.

Marcus said: "There is a key point worth mentioning here. There is no government or regulators trying to kill the project from a legal or regulatory perspective."

"This is 100% a regulatory conspiracy, and the main means is to intimidate the banking institutions involved in this project."

Marcus revealed that Libra encountered bottlenecks immediately after its announcement in 2019. Although the team made some adjustments and postponed the launch of the project to 2021, regulatory opposition still exists.

Marcus emphasized that Federal Reserve Chairman Jerome Powell changed his position after meeting with Treasury Secretary Janet Yellen, which was a turning point.

Marcus revealed that Yellen called supporting Libra "regulatory suicide", which prompted the Federal Reserve to issue a warning to banks involved in the project.

During these calls, the Fed's general counsel reportedly warned banks not to move forward with the Libra project, citing dissatisfaction with the project.

"The Fed spoke to all participating banks, and the Fed's general counsel read a prepared statement to each bank, saying 'We can't stop you from moving forward and launching the project, but we are uncomfortable with you doing so. 'That's it, it's all over. ”

Since then, people in the crypto asset industry have supported Marcus's statement.

Both former Libra board member Kathryn Haun and Gemini co-founder Tyler Winklevoss highlighted how regulatory motivations may have derailed Libra.

“Gemini worked closely with David and his Meta team to help launch Libra (aka Diem),” Winklevoss said.

“We were on the same page when federal regulators shot down the project. It was all regulatory and had no legal basis.”

Reflecting on the experience, Marcus stressed the need for decentralization when building future financial systems.

He believes BTC is an ideal foundation for such a network, citing its neutrality and tamper-proof design.

Marcus concluded: "If you want to build an open money network for the world, where trillions of dollars can flow every day and last for 100 years, you have to build it on the most neutral, decentralized, tamper-proof network and asset, and that is undoubtedly BTC."

Marcus's revelations intensify scrutiny of "debanking" in the crypto asset and technology space.

Recent allegations of regulatory-motivated financial restrictions have sparked further discussion about the intersection of regulation, supervision, and innovation in the United States.