CoinDesk at 10: The Ghost of Libra Lives On
Facebook’s ambitious 2019 stablecoin project never went live. But it sure left a lasting impression. This feature is part of our CoinDesk Turns 10 series looking at the biggest stories in crypto history.
Facebook’s Libra stablecoin was going to let anyone, anywhere, transact money over the internet. A basket of fiat currencies would ensure Libra’s price stability, while a group of 28 varied companies would oversee the project.
Libra users wouldn't even need to 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 cryptocurrencies with the might of Facebook’s awesome social media network.
This feature is part of our "CoinDesk Turns 10" series looking back at seminal stories from crypto history. Libra is our choice of the most momentous story from 2019.
“There are two sets of work that we do on payments,” CEO Mark Zuckerberg said during a Congressional hearing in October 2019. “One is building payment systems that allow people to send money on top of the existing financial systems.”
“[Then] there’s another set of work, which is what we’re trying to do with Libra, which is trying to help rethink what a modern infrastructure for the financial system would be if you started it today rather than 50 years ago on a lot of outdated systems.”
If only any part of the project had ever come to fruition.
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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 stablecoin, many of its partners and even its name in a bid to launch something, anything.
Ultimately, 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, a virtual world effort (which itself is struggling). The various other payments, telecommunications and other companies that were part of the original coalition have gone back to their normal businesses, though some remain active in the crypto sector.
Though the project itself never took off, it managed to leave a few enduring legacies from its 958 days of existence: Legislative efforts worldwide have been born in reaction to Libra, and crypto in general received a massive boost in mainstream recognition. And, of course, there's the technology underpinning the project. As of press time, there's multiple projects launched by former Meta employees and using Libra (later Diem)’s technology.
What went wrong
The project may have been doomed from the start, largely due to its association with Facebook, which, at the time, was fresh off the Cambridge Analytica scandal.
Almost immediately after it was announced, lawmakers around the world were calling for hearings and investigations.
“I think Libra was met with a giant overreaction around the world,” said Dante Disparte, who was the Libra Association’s head of policy and communications in June 2019. He is now the chief strategy officer at stablecoin issuer Circle Internet Financial.
Libra sought permission rather than forgiveness, Disparte said, 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 U.S. approvals before launching the Libra payment system in any country in the world, even where those approvals might not be strictly required,” Zuckerberg told Congress in October 2019. “All of the regulators that have jurisdiction over a part of what we’re doing, we’re working with them and we’ll seek approval.”
Regulators appeared loath to grant 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.
Crypto members ranged from Coinbase and Xapo, to Anchorage Digital and Andreessen Horowitz.
“When 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.
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Instead, lawmakers went so far as to warn some of the payments firms participating in the Libra project that they may be subject to greater regulatory scrutiny. Ultimately, companies 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 more than a white paper that talked about an idea,” he said.
Within months of Facebook announcing that white paper, there were three different full Congressional committee hearings focused specifically on Libra.
“Ultimately, that was a split screen moment that was replicated all over the world,” Disparte said.
Libra was formally announced in 2019, but rumors of its imminent launch had been circulating for six months, and Facebook’s involvement in blockchain and crypto technology had been known for well over a year.
Despite this, Facebook kept mum about what exactly it was working on, leaving reporters to speculate based on 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 about this thing. There had been these dribs and drabs of reports based on sources, but this was the official revealing of what had really been under wraps,” he told me.
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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 said. “At the time, 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 five different stories in quick succession covering the dividend token, a hint at a digital identity project, showing how the technical issues borrowed from Bitcoin and Ethereum, exploring the white paper and the announcement 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 token that never launched, Libra still leaves a massive legacy.
Facebook’s involvement helped mainstream the idea of cryptocurrency, 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 crypto went mainstream. And this was kind of like the first time crypto went mainstream a little bit,” Seward said.
A lot of people were asking what Libra was, which in turn drew them to the question of what crypto was well before it became an everyday term.
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Crypto “popped onto the public’s radar in a way that it hadn’t before,” Seward said. “It was one of those first ‘Oh, wait, this Web3 thing, smart people in Silicon Valley are thinking about this. OK, we better start thinking about this, too.”
And lawmakers started talking more about crypto than they had before. Libra inspired various legislative bodies to start introducing and passing legislation addressing the crypto ecosystem, and it spurred more action from some regulators and central banks on addressing the issues Libra sought to address, Disparte said.
There is no question that the very concept of central bank digital currencies (CBDCs) was mostly an abstraction pre-Libra, Disparte said. At the time, no country had launched a CBDC or was really thinking of digitizing its currency on a distributed ledger.
Now, more than 100 central banks are studying CBDCs to some extent, he said.
Legislation was also drafted that would specifically address stablecoins as its own subsector of the broader crypto ecosystem.
Disparte pointed to the European Union’s landmark Markets in Crypto Assets (MiCA) legislation, which is now – after years of debate and work – close 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 said. “And so in some ways, [Libra was] a project that was also a heat shield that took the brunt of the world's policy responses and regulatory responses and public hearings.”
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