Meta Platform Inc., the parent company of Facebook, Whatsapp and Instagram may finally be abandoning its grand cryptocurrency project due to regulatory pressure. This is according to a news report from Bloomberg.
The token proposed by Meta, known as Libra, has hit a number of roadblocks since its inception. One of such is when a major partner, Paypal, pulled out of the partnership. In addition, various governments spoke up against it, stating that the coin could be a threat to their monetary economies.
Now, the Diem association, the body in charge of Meta’s cryptocurrency is looking to sell its assets in order to return some value back to investors as reported by The Verge. It is also looking for a way to settle the engineers who worked on the ambitious project. all of these point to the end of the project.
The report states that Silvergate Bank, which was to be the issuer of the coin bowed to pressure from the U.S Federal Reserve as the agency was uneasy with the plan.
Meta’s Cryptocurrency Journey
In 2019, Meta, then known as Facebook, planned to launch its new cryptocurrency, Libra, marking the platform’s expansion into the global payments sector. The mission was to “create a simple global financial infrastructure that empowers billions of people around the world.”
Libra was backed by real assets so it boasted of not having the volatility that traditionally happens in the cryptocurrency market. Facebook linked up with 28 partners to form the Libra Association, a governing body for the new digital coin. Some of the partners were Coinbase, MasterCard, Visa, Stripe and Paypal, which eventually pulled out.
Even then, the project faced many concerns from regulators which led to the scaling down of Libra’s vision- instead of a stable coin backed by a basket of global fiat currencies, the vision morphed into individual coins backed by single national currencies.
There was a corresponding exit of some of its founding members including PayPal, Mastercard, Vodafone, and eBay.
Also, Libra came under fire for its close association with Facebook, which has faced multiple privacy scandals. Some analysts have pointed to Zuckerberg and Facebook’s reputation as one of the leading reasons for Libra’s many critics.
In September 2021, Facebook launched a pilot of its digital currency wallet, Novi, in the US and Guatemala. However, US Senators called on Facebook to end its digital wallet and cryptocurrency project saying that the company cannot be trusted to manage cryptocurrency.
The group of regulators said they feared what might happen if the vast network of a tech company’s users suddenly began transacting in a new currency. They also feared that combining a stable coin issuer with a big corporation “could lead to an excessive concentration of economic power.”
Two months later, Meta’s crypto lead David Marcus—who is a co-founder of Diem—resigned from his position.
Future of the grand project
It has been a lengthy back and forth process between regulators and Meta and it might finally be coming to an end as Meta winds down the project.
It’s unclear how a potential buyer would value Diem’s intellectual property or the engineers that helped develop it. Discussions are early, the people cautioned, and there’s no guarantee Diem will find a buyer.