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Mark Zuckerberg has been accused of many things, but a lack of ambition is not among them.
In 2018, still reeling from the Cambridge Analytica privacy scandal and growing regulatory scrutiny, he authorised a team of Facebook employees to start work on a new project with a grand goal: creating a global currency free of government control.
The groundwork was meticulous. Zuckerberg hosted Mark Carney, then Governor of the Bank of England, at the company’s California headquarters as one in a series of meetings with top central bankers.
Many of the world’s top tech companies, meanwhile, were corralled into joining the project, including Uber, PayPal and Vodafone. It was an attempt to show the dive into the world of cryptocurrency was about more than just "Zuckbucks".
By the time Facebook was ready to unveil the project in June 2019, an intricate legal structure and set of technical plans had been established. Libra - as the cryptocurrency would be called - would be based in Switzerland, independent of Facebook and owned equally by its members.
In the years before, Facebook and its WhatsApp messaging app had been the gateway to the internet for hundreds of millions of people in developing countries. The idea was that Libra would bring those same people into finance.
“Libra holds the potential to provide billions of people around the world with access to a more inclusive, more open financial ecosystem,” David Marcus, the head of the project said, promising a launch within a year.
But two and a half years later, not a single Libra coin has been spent, and the project is effectively dead. This week it emerged that the association behind it - Diem Association - is winding down and selling off its assets to a small bank in California, named Silvergate, for $200m (£150m).
The sale is not only a blow to Zuckerberg’s grand dreams, but one for the entire cryptocurrency industry.
Facebook, which has since rebranded as Meta, owned around a third of the project, and can handle the financial hit. It has moved on to new, shinier, pursuits, focusing on the “metaverse” of virtual worlds that Zuckerberg considers the future of human interaction.
Its botched cryptocurrency plans, however, have demonstrated what happens when central banks feel threatened.
“He [Zuckerberg] completely underestimated the backlash that he would get from states,” says Katharina Pistor, director of the Centre on Global Legal Transformation at Columbia Law School. “It was a real attack on monetary sovereignty.”
Libra got off to a bad start, and it only got worse. On the day it was announced, France’s finance minister Bruno Le Maire warned it must not become a sovereign currency, and Carney promised regulators would be on high alert. Within a month, Marcus was hauled in front of a sceptical US Senate committee, at which Senator Sherrod Brown accused him of “breathtaking arrogance”.
“[Facebook] has burned the house down repeatedly and called every attempt a learning experience. Do you really think people should trust you with their bank accounts and their money?” she said.
Zuckerberg, too, was grilled over the plans, accused of seeking to help criminals and, crucially, undermining the dollar.
By then, Facebook’s corporate partners in the project had already begun to get cold feet. Less than two months after Libra was announced, PayPal became the first member to leave the association. It was followed swiftly by Visa, Mastercard, Stripe, eBay and Vodafone - an exodus that undermined Facebook’s efforts to position Libra as a group project.
Insiders at the companies said they had joined the project as a sort of insurance - wanting to get in early should it prove successful - but quickly noticed the writing on the wall.
As deadlines slipped, executives running Libra quickly moved to Plan B. Instead of presenting it as a global currency, they wrapped it in the American flag as a counterweight to China’s growing digital currency ambitions.
It hired Stuart Levey as its chief executive. The former US Treasury official, who was in charge of fighting terrorism, had pioneered using the US financial system as a weapon against America’s enemies.
The organisation also changed its name, from Libra to Diem, and announced it would launch a cryptocurrency tied to the dollar, having previously said its value would be based on a weighted basket of global currencies.
It even said it would move headquarters to the US. Levey practically positioned Diem as an arm of foreign policy: “It’s critical for the US to foster innovation in this space,” he said. “The US can’t really afford to fall behind here.”
But he found few sympathetic ears. Facebook eventually launched a trial payments service last year, but the app merely allowed people to send money between the US and Guatemala - hardly the global currency once envisaged. Gradually, Facebook executives lost interest in the project, and left the company. Marcus, its head, departed at the end of last year.
Matt Perault, a former Facebook policy director now at the University of North Carolina’s Centre on Technology Policy, says the company’s struggles shows that politicians can exert pressure on large tech companies, even if they haven’t passed laws breaking them up.
“Even if they struggle to weaken Big Tech’s current business models, they may be able to constrain their future growth. Policymakers can make it challenging for the companies to compete in new products and industries such as cryptocurrency and virtual reality.”
Even Zuckerberg has moved on: his rebrand of the company to Meta last year did not even mention Diem.
But its effects linger. China is believed to have sped up plans for its own “digital yuan” in response to Libra being announced and, while Facebook’s coin has faltered, Beijing has continued to develop its version.
Western banks, too, have responded. Rishi Sunak has urged the Bank of England to look at the possibilities for “Britcoin”, which Threadneedle Street plans to consult on this year - although a House of Lords report recently found “no convincing case” for creating one. Last week, the Federal Reserve outlined the potential benefits of a digital dollar.
Going forward, it may not bode well for Bitcoin and other cryptocurrencies that the world’s central banks are ready to spring into action as soon as they perceive a threat.
“It was the scale of [Facebook’s] project, and the ambition to basically remove it from the direct reach of the law that I think posed the threat,” says Pistor. “Most cryptocurrencies are much smaller and less ambitious.”
But Facebook’s tumultuous efforts may be a preview of what might happen should other cryptocurrencies including Bitcoin truly start to challenge the existing order.