{"id":402764,"date":"2022-02-02T19:12:11","date_gmt":"2022-02-02T16:12:11","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/vale-diem-how-facebooks-ambitious-stablecoin-project-came-to-an-end\/"},"modified":"2022-02-02T19:12:11","modified_gmt":"2022-02-02T16:12:11","slug":"vale-diem-how-facebooks-ambitious-stablecoin-project-came-to-an-end","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/vale-diem-how-facebooks-ambitious-stablecoin-project-came-to-an-end\/","title":{"rendered":"# Vale Diem: How Facebook\u2019s ambitious stablecoin project came to an end"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a3b72d2f0779\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a3b72d2f0779\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/vale-diem-how-facebooks-ambitious-stablecoin-project-came-to-an-end\/#Phase_1_The_white_paper\" >Phase 1: The white paper<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/vale-diem-how-facebooks-ambitious-stablecoin-project-came-to-an-end\/#Initial_reception\" >Initial reception<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/vale-diem-how-facebooks-ambitious-stablecoin-project-came-to-an-end\/#Phase_2_Regulatory_pushback\" >Phase 2: Regulatory pushback<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/buradabiliyorum.com\/en\/vale-diem-how-facebooks-ambitious-stablecoin-project-came-to-an-end\/#Phase_3_The_rebranding_that_didnt_help\" >Phase 3: The rebranding that didn\u2019t help<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/buradabiliyorum.com\/en\/vale-diem-how-facebooks-ambitious-stablecoin-project-came-to-an-end\/#Further_pullbacks\" >Further pullbacks<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/buradabiliyorum.com\/en\/vale-diem-how-facebooks-ambitious-stablecoin-project-came-to-an-end\/#Is_this_the_end_for_Diem\" >Is this the end for Diem?<\/a><\/li><\/ul><\/nav><\/div>\n<p>&#8220;<strong># Vale Diem: How <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/social-mediaa\/\" data-internallinksmanager029f6b8e52c=\"1\" title=\"Social Media\" target=\"_blank\" rel=\"noopener\">Facebook<\/a>\u2019s ambitious stablecoin project came to an end <\/strong>&#8221;<br \/>\n<img decoding=\"async\" src=\"https:\/\/images.cointelegraph.com\/images\/840_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjItMDIvMmY3NzYwNjQtN2IyYS00MTBkLTkzZmEtMGRlYzUxMDY0ZmRiLmpwZw==.jpg\" \/><\/p>\n<div class=\"post-content\" data-v-128018ef>On Jan. 31, Meta, formerly known as Facebook, announced that it was pulling from its stablecoin project, Diem, formerly known as Libra. Intellectual property and other assets related to the operations of the Diem Payment Network were to be sold to Silvergate Capital Corporation, essentially meaning the end to Mark Zuckerberg and his corporations\u2019 stablecoin aspirations, at least in their current shape. This also marks the end of a once-groundbreaking initiative that was revealed in 2019 with a promise to bring a global alternative to fiat money to Facebook\u2019s 2-billion-strong user base. Here is how this plan went from the initial announcement to the shutdown. <\/p>\n<h3><span class=\"ez-toc-section\" id=\"Phase_1_The_white_paper\"><\/span>Phase 1: The white paper<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">news<\/a> of Facebook launching its own digital currency came as a boost of optimism for the social media giant, whose brand in the late 2010s came to be<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.nbcnews.com\/tech\/social-media\/timeline-facebook-s-privacy-issues-its-responses-n859651\"> associated<\/a> with the lack of privacy and ethics, as well as disfunctional governance.<\/p>\n<p>On June 18, 2019, the company released the white paper of its prospective global stablecoin under the name \u201cLibra.\u201d The prospective asset was to be backed by its own blockchain on the operational side and by a reserve of various assets (a basket of bank deposits and short-term government securities) on the financial level. <\/p>\n<p>From the very beginning, Libra didn\u2019t try to pretend to be a decentralized cryptocurrency \u2014 its governance mechanism was designed as a consortium (the \u201cLibra Association\u201d) including big-name companies such as Mastercard, PayPal, Visa, S<a href=\"https:\/\/buradabiliyorum.com\/en\/category\/trip-and-travel\/\" data-internallinksmanager029f6b8e52c=\"10\" title=\"Trip &amp; Travel\" target=\"_blank\" rel=\"noopener\">trip<\/a>e, eBay, Coinbase, Andreessen Horowitz, Uber and others. Facebook itself was \u201cexpected to maintain a leadership role.\u201d The social media giant also planned to maintain its influence by running a wallet, Calibra.<\/p>\n<p>The project\u2019s original positioning was to serve not as a speculative asset but as a service payment tool. The minting of new tokens was tied to the process of buyout by \u201cauthorized resellers\u201d from among the association\u2019s members. <\/p>\n<h3><span class=\"ez-toc-section\" id=\"Initial_reception\"><\/span>Initial reception<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The white paper received mixed feedback from the crypto community. Some of the industry opinion leaders decried the compromises that Facebook\u2019s project had made in terms of both decentralization and security. Bitcoin (BTC) advocate Andreas Antonopoulos, for example, denied Libra the status of cryptocurrency on the basis that it lacked any of crypto\u2019s fundamental characteristics, such as being public, neutral, censorship-resistant and borderless. <\/p>\n<p>Others, however, preferred to focus not on the actual project\u2019s design but on Libra\u2019s potential effects on global crypto adoption. \u201cSome of the biggest companies in the world are starting to recognize the promise of cryptocurrency and see its potential for changing the way consumers and businesses interact globally,\u201d said Tron founder and CEO Justin Sun at the time.<\/p>\n<p>But perhaps the most important thing about the Libra project was its potential to sidestep both existing crypto and fiat currencies alike \u2014 not by the virtue of its technical or design superiority but solely due to the network effects of having over 2 billion users on board from day one.<\/p>\n<p>As Ross Buckley, a digital economy expert and professor at the University of New South Wales, <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/papers.ssrn.com\/sol3\/Papers.cfm?abstract_id=3414401\">warned<\/a> in his paper, \u201cLibra is perhaps the ultimate example of something that is highly likely to move from \u2018too small to care\u2019 to \u2018too big to fail\u2019 in a very short period of time [&#8230;] This is an alternative money.\u201d Buckley surely wasn\u2019t alone in his fears \u2014 the obviousness of Libra\u2019s inherent power predestined the enormous pressure it would get from the regulators. <\/p>\n<h3><span class=\"ez-toc-section\" id=\"Phase_2_Regulatory_pushback\"><\/span>Phase 2: Regulatory pushback<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>It took the United States Senate less than a month to get Libra co-creator David Marcus to testify at a special hearing, where the Facebook executive was exposed to a fervent grilling. Notably, it was not only Senator Sherrod Brown but also his perpetual opponent Senator Pat Toomey, who bombarded Marcus with hard questions (although Toomey also called not to \u201cstrangle the baby in the crib\u201d). The news about Facebook\u2019s private currency hadn\u2019t gone unnoticed even by the then-President Donald Trump, who <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.reuters.com\/article\/usa-trump-cryptocurrency-idCNW1N23501D\">reacted<\/a> in his signature expressive manner: <\/p>\n<blockquote><p>If Facebook and other companies want to become a bank, they must seek a new Banking Charter and become subject to all Banking Regulations, just like other Banks, both National and International.<\/p><\/blockquote>\n<p>The pushback was not confined to the United States. In September 2019, French Finance Minister Bruno Le Maire declared that his country and the whole of Europe wouldn\u2019t tolerate Facebook\u2019s new project because the \u201cmonetary sovereignty of states is at stake.\u201d Weeks later, the Bank of England<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.theguardian.com\/technology\/2019\/oct\/09\/facebook-libra-currency-bank-of-england\"> issued<\/a> a warning that, for it to become legal in the United Kingdom, Libra would have to meet all the necessary standards of traditional banking compliance. <\/p>\n<p>What followed these statements was the first wave of backouts from some of the Libra Association\u2019s founding members. With such companies as PayPal, Visa, Mastercard, eBay and Mercado Pago quitting the project, its image took a huge hit. <\/p>\n<p>But back then, Facebook speakers played down the significance of these events. \u201cOf course, it\u2019s not great news in the short term, but in a way it\u2019s liberating. Stay tuned for more very soon. Change of this magnitude is hard. You know you\u2019re on to something when so much pressure builds up,\u201d <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/twitter.com\/davidmarcus\/status\/1182775730427572224\">wrote<\/a> Marcus on Twitter.<\/p>\n<p>By October 2019, five European nations \u2014 France, Germany, Italy, Spain and the Netherlands \u2014 had created an unofficial task force to prevent Libra\u2019s launch in Europe. The pressure rose to the point when the CEO of the Netherlands\u2019 largest bank, Ralph Hamers, publicly commented on the possibility to cut any operations with Facebook.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Phase_3_The_rebranding_that_didnt_help\"><\/span>Phase 3: The rebranding that didn\u2019t help <span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Facebook\u2019s response to the pressure came in April 2020 in the form of \u201cLibra 2.0.\u201d The updated white paper<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.diem.com\/en-us\/white-paper\/#cover-letter\"> introduced<\/a> four key changes \u201cto address regulatory concerns,\u201d most notably of which was the switch from a single currency to a family of stablecoins, each backed by a single national currency (such as the U.S. dollar, euro and British pound). <\/p>\n<p>As Brieanna Nicker from the Brookings Institute<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.brookings.edu\/research\/facebooks-libra-2-0\/\"> wrote<\/a> at the time, \u201cIt also could be seen as a scaling back of Facebook\u2019s ambitions, for the proposal is now more like a PayPal with a different technological backbone than a competitor to sovereign currencies.\u201d Among other stated changes were the enhanced compliance framework and transition from a permissioned to permissionless blockchain within five years. <\/p>\n<p>On Dec. 1, 2020, Facebook complemented the technical adjustments with a brand change: Libra became Diem, and Calibra became Novi. According to the company\u2019s statement, this transition should have marked \u201ca new day for the project.\u201d The renaming came a week after the disclosure of a plan to launch the first USD-backed stablecoin. <\/p>\n<p>At that time, the second version of the project was still officially opposed by the G7. Olaf Scholz, the current federal chancellor of Germany, who then served as a finance minister, called Diem \u201ca wolf in sheep\u2019s clothing,\u201d stating that the name change hadn\u2019t convinced the regulators. <\/p>\n<h3><span class=\"ez-toc-section\" id=\"Further_pullbacks\"><\/span>Further pullbacks<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The year 2021 didn\u2019t bring good news for Diem. As the long-awaited launch has been delayed once again (by that time, Switzerland\u2019s Financial Market Supervisory Authority still hadn\u2019t granted grant Switzerland-based the Diem Association a payment license), on Feb. 23, the European Central Bank demanded from the European Union lawmakers a veto power to unilaterally block any private stablecoin projects when necessary. <\/p>\n<p>In September 2021, The Washington Post<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.washingtonpost.com\/us-policy\/2021\/09\/10\/facebook-crypto-diem-treasury\/\"> reported<\/a> on the ongoing attempts of Facebook\u2019s top management to reach some compromise with U.S. regulators. But <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>arently, the negotiations stalled, as Marcus\u2019 <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/medium.com\/@davidmarcus\/good-stablecoins-a-protocol-for-money-and-digital-wallets-the-formula-to-fix-our-broken-payment-f11f59fc92d7\">claim<\/a> that Diem \u201chas addressed every legitimate concern\u201d caused public blowback from lawmakers.<\/p>\n<p>The chairwoman of the House Financial Service Committee, Maxine Waters, retorted that rebranding had nothing to do with solving the major privacy, national security, consumer protection and monetary policy concerns. Top Republican member of the same committee, Representative Warren Davidson, sardonically mimicked Marcus\u2019 blog post: <\/p>\n<blockquote><p>I\u2019m not sure how Facebook and the Diem Association could have addressed \u2018every legitimate concern\u2019 whenever there\u2019s overarching regulatory uncertainty that permeates many facets of the crypto space.<\/p><\/blockquote>\n<p>The last glimpse of hope sparked when, in a partnership with Binance, Facebook finally launched the pilot version of Novi Digital Wallet \u2014 a vital part of the planned Diem ecosystem. But it didn\u2019t last longer than a few hours before a group of five senators wrote a joint letter to Zuckerberg with an unequivocal demand to \u201cimmediately discontinue\u201d the project. In a casuistic response, the Diem Association tried to distance itself from Facebook. <\/p>\n<p>On Dec. 1, Marcus, the formal head of Novi and the face of the Meta\/Diem project, announced his resignation. Marcus, who had been working at Facebook since 2014, didn\u2019t go into detail on the reasons for his decision, joining the list of Facebook\u2019s key crypto figures who left in 2021, including fellow Diem co-founders Morgan Beller and Kevin Weil. With Marcus\u2019 departure, it was hard to expect anything good in the upcoming 2022. <\/p>\n<h3><span class=\"ez-toc-section\" id=\"Is_this_the_end_for_Diem\"><\/span>Is this the end for Diem?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Speaking to Cointelegraph immediately after the news of Facebook parting with Diem, Buckley, who had foreseen the regulatory reaction to the project back in 2019, shared his conviction that this is indeed the end of the stablecoin initiative:\u00a0\u201cI would be really surprised if it survives. It is a project designed to benefit from Facebook\u2019s scale and reach and is now quite a scarred product.\u201d<\/p>\n<p>Buckley believes the company \u201cprofoundly mishandled the entire announcement\u201d back in the day, overplaying its card as one of the biggest tech companies in the world. It surely wasn\u2019t well-received by the wide range of regulators across the globe, as a digital currency with a user base of 2 billion was obviously far beyond the scope of a social media business: <\/p>\n<blockquote><p>Facebook took the classic tech company approach to this of surging ahead and then seeking forgiveness rather than seeking permission upfront. This may well work with telecoms [&#8230;] but financial regulators expect to be treated with respect, as do governments with respect to their monetary sovereignty. The sharp resistance was in part because financial regulators and governments first learned of this from the media, not directly and well in advance, from Facebook.<\/p><\/blockquote>\n<p>Apart from Zuckerberg\u2019s bravado that possibly played its role in Libra\/Diem\u2019s ultimate demise, this case could be seen as a hint to something more alarming. Facebook\u2019s project of the world\u2019s first global digital currency with an immediate mass adoption boost provoked instantaneous and concerted resistance from regulators. <\/p>\n<p>What that means is that we can probably expect a response no less stiff and immediate should any other digital currency rise up to Diem\u2019s adoption potential. As Buckley puts it, \u201cThe ability to mint the currency of the realm is a core element of sovereign capacity and has been for centuries.\u201d And there\u2019s no reason to believe that it won\u2019t be defended ferociously. Hopefully, Diem\u2019s example will serve as a reminder that the importance of regulatory negotiations should not be underestimated.<\/p>\n<\/div>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong>\n<\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more News articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/general\/\" target=\"_blank\" rel=\"noopener\">General category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/cointelegraph.com\/news\/vale-diem-how-facebook-s-ambitious-stablecoin-project-came-to-an-end\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;# Vale Diem: How Facebook\u2019s ambitious stablecoin project came to an end &#8221; On Jan. 31, Meta, formerly known as Facebook, announced that it was pulling from its stablecoin project, Diem, formerly known as Libra. Intellectual property and other assets related to the operations of the Diem Payment Network were to be sold to Silvergate&#8230;<\/p>\n","protected":false},"author":1,"featured_media":402765,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/images.cointelegraph.com\/images\/1200_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjItMDIvMmY3NzYwNjQtN2IyYS00MTBkLTkzZmEtMGRlYzUxMDY0ZmRiLmpwZw==.jpg","fifu_image_alt":"","footnotes":""},"categories":[1],"tags":[74858,81812,75494,75493,52214,28340,72705,4974,5077,70934,70289],"class_list":["post-402764","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-bitcoin-regulation","tag-calibra","tag-libra","tag-stablecoin","tag-congress","tag-europe","tag-european-union","tag-facebook","tag-mark-zuckerberg","tag-regulation","tag-senate"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/402764","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=402764"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/402764\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/402765"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=402764"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=402764"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=402764"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}