Facebook’s Libra stablecoin was going to allow anyone, anywhere to transact on the internet. A basket of fiat currencies would provide price stability for Libra, while a diverse group of 28 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 the potential to reshape sending cross-border funds and international trade. Conceptually, it combined the promise of cryptocurrencies with the power of Facebook’s formidable social media network.
This feature is part of our “CoinDesk celebrates its 10th anniversary” series looking back at landmark stories in the history of cryptography. Libra is our pick for the most memorable story of 2019.
“We’re doing two sets of work on payments,” CEO Mark Zuckerberg said during a congressional hearing in October 2019. “One is building payment systems that allow people to send money. money on top of 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infrastructure for the financial system would be like if you started it today rather than there is 50 years old on many outdated systems.”
If only part of the project had already come to fruition.
Although the project itself never took off, it did manage to leave some lasting legacies from its 958-day existence: Legislative efforts around the world were born in reaction to Libra, and crypto in general has received a huge boost in mainstream recognition. And, of course, there’s the technology behind the project. As of press time, several projects have been started by former Meta employees and use technology from Libra (later Diem).
The project may have been doomed from the start, largely because of its association with Facebook, which at the time was fresh out of the Cambridge Analytica scandal.
“I think Libra has been met with a giant overreaction around the world,” said Dante Disparte, who was head of policy and communications at the Libra Association in June 2019. He is now director of strategy at the Circle Internet Financial stablecoin issuer.
Libra asked for permission rather than forgiveness, Disparte said, echoing comments from Zuckerberg and David Marcus (one of Libra’s creators) at the start of the project.
“We are committed to obtaining all appropriate U.S. approvals before launching the Libra payment system in any country in the world, even when those approvals are not strictly required,” Zuckerberg told Congress in October 2019. “All regulators who have jurisdiction over some of what we do, we work with them and will seek their approval.
Regulators seemed reluctant to grant such permission. Policymakers were also not reassured by the Libra Association’s oversight of the project, viewing it as a Trojan horse for ultimate control of Facebook.
A number of payment technology 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 and Andreessen Horowitz.
“When the Libra project came up, the personal calculation I had was that it would be a project that would change the world, and if nothing else, change the arc of the conversation,” Disparte said.
Instead, lawmakers have gone so far as to warn some of the payment companies participating in the Libra project that they may face greater regulatory scrutiny. Ultimately, companies like Visa and Mastercard and PayPal pulled out before the Libra Association was even officially instituted.
Disparte felt unprepared for the fight. “We were armed with little more than a white paper that talked about an idea,” he said.
A few months after Facebook announced this white paper, three full congressional committee hearings were devoted specifically to Libra.
“Ultimately, it was a split-screen moment that was replicated all over the world,” Disparte said.
Libra was officially 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 over a year.
Despite this, Facebook has remained silent on what exactly it was working on, leaving journalists to speculate based on what little information is available.
Zack Seward, who was an editor at CoinDesk in 2019, flew to Menlo Park, Calif., for private briefings from Facebook executives and Libra executives ahead of the big reveal.
“It was super secret. Everybody was so excited about this thing. There had been these snippets of reports based on sources, but this was the official reveal of what had really been hidden,” I said. he said.
In the heart of Silicon Valley, Seward got to hear about the project first-hand with other CoinDesk publishers listening in.
“They shared the technical documentation and the white paper, the grand vision of what this was going to accomplish,” he said. “At the time, we were mostly interested in all these big giant business partners that were involved. They put in the money to secure this network, and they would legitimize this thing, wouldn’t they?”
The project remained shrouded in secrecy, however. In October 2019, this reporter flew to Geneva, Switzerland to cover the official establishment of the project’s board, although that body did not want immediate media coverage.
For a token that was never launched, Libra still leaves a massive legacy.
Facebook’s involvement helped mainstream the idea of cryptocurrency, propelling what was at the time a relatively stable bear market into broader public awareness.
“It was June 2019, so it was in the doldrums of the last bear market before the 2021 mania where crypto went mainstream. And it was kind of like the first time crypto went a bit mainstream,” Seward said.
Many people asked what Libra was, leading them to wonder what crypto was long before it became a household term.
The crypto “came onto the public radar in a way never before seen,” Seward said. “It was one of those first ‘Oh wait, that Web3 thing, the smart people in Silicon Valley are thinking about. OK, we better start thinking about that too.
And lawmakers have started talking more about crypto than before. Libra inspired various legislative bodies to begin introducing and passing crypto ecosystem legislation, and this prompted some regulators and central banks to do more to address the issues Libra was seeking to address, Disparte said. .
There is no doubt that the very concept of central bank digital currencies (CBDCs) was mostly an abstraction before Libra, Disparte said. At the time, no country had launched a CBDC or was seriously considering digitizing their currency on a distributed ledger.
Now more than 100 central banks are studying CBDCs to some degree, he said.
Legislation has also been drafted that would specifically treat stablecoins as its own sub-sector of the larger crypto ecosystem.
Disparte highlighted the landmark European Union Crypto Asset Markets (MiCA) legislation, which is now – after years of debate and work – about to come into force.
“It was a regulatory body born in response to the fear of big tech, and big tech in particular, getting into the money flow,” he said. “And so in some ways, [Libra was] a project that has also been a heat shield that has borne the brunt of political responses, regulatory responses and public hearings from around the world.