Ex-Meta crypto chief David Marcus says there was no legal or regulatory angle for the government to kill its Libra project and “it was 100% a political kill”

How Libra Was Killed. I never shared this publicly before, but since @pmarca opened the floodgates on @joerogan's pod, it feels appropriate to shed more light on this. As a reminder, Libra (then Diem) was an advanced, high-performance, payments-centric blockchain paired with a

@davidmarcus 2024-11-30 David Marcus

Context & Ripple Effects

Libra’s rollout had already drawn sustained congressional scrutiny, including questions over how the association would handle regulatory compliance. The project’s ambition to become a broadly accepted payment network made that scrutiny central rather than peripheral.

The later withdrawal of major partners, including concerns cited by Mastercard’s chief executive, showed that political and regulatory risk could reshape the consortium before a launch. Marcus’s account adds a former executive’s allegation that official pressure, not a formal legal finding, was decisive.

First-order effects

Marcus’s claims reopen the public record around Libra/Diem’s shutdown and put named government officials and agencies at the center of a politically charged account of the decision.
The account reinforces the distinction between a project being formally unlawful and participants judging the regulatory exposure too costly to continue; Visa, Mastercard, and Stripe are central to that allegation.

Second-order effects

For prospective payment-stablecoin backers, the episode underscores that partner commitments can be vulnerable to supervisory pressure even when a product has not been ruled illegal.
The allegation may sharpen demands for clearer boundaries between formal rulemaking, bank supervision, and informal government pressure in digital-asset policy debates.

Third-order effects

If firms conclude that compliance alone does not create predictable market access, large-scale crypto-payment initiatives may continue to face a crypto legitimacy gap: institutional acceptance becomes as important as technical design.
The enduring policy question is whether stablecoin projects will receive explicit, durable operating rules or remain exposed to shifting political and reputational judgments.

The trend: Libra’s demise is one data point in the broader contest over whether privately built digital-money networks can gain institutional legitimacy under public-sector oversight.

Discussion

@tampawoman1965.bsky.social @tampawoman1965.bsky.social on bluesky
My prediction holds 2016 I said 5-10 years and they'll crash the global economy with crypto.
@theopriestley.com Theo on bluesky
Here we go, Facebook will be resurrecting its crypto project, Libra, for another shot now the road is clear. — Crypto is a lynchpin for the billionaire ‘network state’ plan. — www.vcinfodocs.com/el-salvador- ... [embedded post]
@ronwhammond Ron Hammond on x
@davidmarcus ... I'm not denying the agency actions, but here's what I saw when I worked the Libra hearings on the Hill as a staffer in these very meetings: 1) Yes, Libra walked so USDC/UST/etc could run but Libra's rollout/lobbying was beyond abysmal on Capitol Hill. I'll never …
@bryankerr Bryan Kerr on x
While I think that there is definitely overreach happening here, I also don't think Meta really considered the dollarization effect that Libra would have had globally. I think you would have seen emerging markets get torn in half. Maybe that's inevitable with Stablecoins.
@jeffjohnroberts Jeff Roberts on x
“100% a political kill” According to Marcus, fatal blow came when Treasury Secretary Yellen told Fed Chair Powell to pull the plug I'm not convinced a Facebook backed stable coin would have been good policy — but, in terms of process, they deserved better than this
@rohangrey Rohan Grey on x
Lol this is some hilarious fake history “Addressed all concerns” - they had absolutely no idea what they were doing wrt the reserve, currency pegs etc. Violating separation of banking and commerce, had half the consortium pull out, etc.
@billyez2 Billy Easley II on x
Since we're telling stories: Meta revealed Libra to a bunch of DC thinktank staffers (like me!) a week before it went public and everyone in the room thought it was a terrible time to release this iirc
@chrispainteryup Chris Painter on x
In these (apparently second or third-hand) stories, what could “political suicide” even be referring to? What is the political constituency that would be harmed by Libra, if many banks were already onboard? Why would a Fed chair have to worry about “political suicide”?
@discobanker @discobanker on x
I know some regulators in several jurisdictions who still experience PTSD whenever Libra is mentioned so I am not totally convinced by the view that he thinks he had effectively addressed all the regulatory concerns.
@anshublog Anshu Sharma on x
We need laws for crypto. I believe the laws today are inadequate and outdated, and therefore crypto is in genuine legal limbo. I don't think private companies should be able to issue currencies but I believe people should be able to build everything else on blockchain.
@tyler Tyler Winklevoss on x
Can confirm. @Gemini worked closely with David and his team at @Meta to help launch Libra (fka Diem). We were on the one-yard line when Federal regulators murdered this project. It was all politics, no basis in law.
@elonmusk Elon Musk on x
@davidmarcus ... Wow
@erikvoorhees Erik Voorhees on x
people are feeling safe to start talking about the dark machinations of the state a blanket of gloom is being lifted
@rezendi Jon Evans on x
Huh. I wrote about Libra for TC when it launched, and was always puzzled by why and how it just fizzled out...
@tommygriffith Tommy Griffith on x
It is extremely concerning to learn how much nonsense was happening behind the scenes of tech legislation over the last 4 years. Thank you @pmarca and @davidmarcus for coming forward with these stories.
@davidzmorris David Z. Morris on x
Right at the very bottom of this lament, indirectly and in a way many people won't catch, Marcus admits that killing Libra was the right thing to do.
@aditishekar Aditi Shekar on x
I'm no crypto expert but it is incredibly frustrating to watch regulators dramatically slow and eventually destroy innovation in the name of protecting the user. These legacy systems are sometimes doing more harm than good and need to be updated.
@balajis Balaji on x
Everything David said is true. For example, here is the public letter sent to Visa, Mastercard, and Stripe threatening them with regulatory “scrutiny” to stop them from working with Libra. [image]
@jaimassari Jai Massari on x
Sunlight ☀️on the demise of Libra shows a deeply discomforting approach to financial services regulation in the United States. @davidmarcus is right. Many of us cannot report what we saw and experienced—in my case for lawyerly reasons. I can say that there were many
@trace_cohen Trace Cohen on x
Of course the government stopped one of the biggest tech companies in the world from creating their own financial system that would try to supplant them and control global finance. Does anyone think Trump or any other govt would allow this if they couldn't regulate/control it?
@jbrukh @jbrukh on x
Wild thread on the political assassination of Libra project.
@kevinweil Kevin Weil on x
One of the most eye opening experiences of my career.
@lukeyoungblood @lukeyoungblood on x
@davidmarcus ... This absolutely did happen. I was working at @Coinbase at the time and I remember how hard we were working in crypto engineering to add custody support for Libra/Diem because we knew it would be a huge stablecoin with @Meta behind it. But sadly it suffered a poli…
@beardmars Marshall Beard on x
I'm glad @davidmarcus is sharing this. We were closely aligned with his team during this and saw first hand went they went through
@gdanezis George Danezis on x
At last here is a public explanation to colleagues and friends about what happened during my time with Novi / Diem / Libra . Thank you @davidmarcus for speaking up.
@beller Morgan Beller on x
At times, it really felt like we were living in If You Give a Mouse a Cookie but narrated in a mob-like tone
@ajitpai Ajit Pai on x
I don't know the particulars about this technology. But I do know that the combination of regulation (here, effective prohibition) through “raised eyebrow” and governmental embrace of the precautionary principle is deadly for innovation. This cannot remain the norm. H/T @pmarca
@louisrouanet Louis Rouanet on x
We often focus on how and how much should the private sector be regulated. Yet how and how much regulatory activities should themselves be regulated is equally, if not more, important. Regulate the regulators.
@terryangelos Terry Angelos on x
@davidmarcus ... I can confirm Dem leaders called Visa with similar messages. Our crypto team had to backtrack our support. There were plenty of critiques of how Libra might work but the fact that the experiment was not allowed to move forward was a huge step backwards for the US…
@tobi Tobi Lutke on x
@davidmarcus ... Terrible story arc, but great leadership by you all the way through it
@matthewstoller Matt Stoller on x
Libra was hated from the get-go by both sides as a poorly conceived, risky, and unfair scheme. The idea that there was some secret conspiracy to crush it is absurd. There were many public hearings where Libra proponents were embarrassed. [image]
@hellosvapnil @hellosvapnil on x
I was there for this, and it's true. The Feds unilaterally prevented Meta from launching a stablecoin wallet, and there was no law or due process to back it
@brian_armstrong Brian Armstrong on x
Makes sense - the government pressured the banks (again). I think the lesson from Libra is that these tools should be released as open source software, and to not ask for permission. Once they are out in the wild they can't be rolled back. This is why Bitcoin worked, and it's
@regulatorynerd Matt Janiga on x
Libra couldn't be rolled out as open source because it was a stable coin backed by actual FIAT currencies. Also, “just do it” is definitely not the lesson to learn from Libra. The government always has the last gotcha on whether and when they want to enforce the law.
@stevesi Steven Sinofsky on x
De-banking without authority to do so via indirect means.
@caitlinlong_ Caitlin Long on x
@davidmarcus ... Geez @davidmarcus, that sounds familiar. Someday, like you just did, I'll be able to tell the real story of what the Fed did to @custodiabank, and how the Fed lied to achieve Biden/Warren political aims. There is so much corruption & I'm glad it's pouring out in …
@nic__carter Nic Carter on x
In my recent reporting on Silvergate, I considered another section on Libra/Diem but it would have added another 3000 words (Silvergate bought the Diem assets, and I believe this helped bring the eye of Sauron on them.). There is a long postscript to be written about the
@njess Noah Jessop on x
Little story from Libra. Proud to be an alum (and support David and the many alums building)

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