Janet Yellen’s Warning to Fed Chair Killed Meta’s Crypto Project, Says David Marcus

David Marcus, former president of PayPal and head of Meta’s Libra (later renamed Diem) project, has shed new light on the political forces that led to the collapse of what was meant to be a transformative global payments initiative. Marcus, in the wake of venture capitalist Marc Andreessen’s comments about Libra on The Joe Rogan Experience, revealed that the project’s failure was largely due to political interference from U.S. government figures, particularly Treasury Secretary Janet Yellen.

The Ambitious Vision Behind Libra

Launched in June 2019 with the goal of creating a blockchain-based, stablecoin-powered global payments system, Libra was envisioned as a solution to inefficiencies in cross-border payments. Initially backed by 28 companies, including major players like Facebook, Visa, and Mastercard, Libra quickly attracted attention. However, its ambitions came with significant scrutiny, and Marcus soon found himself testifying before the Senate Banking Committee and the House Financial Services Committee, responding to concerns over financial crime, money laundering, and consumer protection.

Despite facing intense regulatory pressure, Libra made efforts to address concerns and began working on obtaining necessary approvals. By early 2021, Marcus claimed that Libra had secured tentative support from some members of the Federal Reserve’s Board of Governors for a limited pilot launch.

Janet Yellen’s Alleged Intervention

However, Marcus alleges that the project’s fate took a dramatic turn when U.S. Treasury Secretary Janet Yellen intervened. According to Marcus, Yellen warned Federal Reserve Chair Jerome Powell that supporting Libra’s launch would be “political suicide.” This intervention, though not directly confirmed, is described by Marcus as the key moment when Libra’s prospects were derailed. Shortly after Yellen’s alleged warning, the Federal Reserve reportedly issued informal warnings to banks involved in the project, discouraging them from continuing their participation.

Political Motivations Behind the Collapse

Marcus views the demise of Libra not as a consequence of legal or regulatory issues, but as a politically motivated decision. He expressed disappointment that the project was effectively killed due to political concerns, despite the team’s extensive efforts to comply with regulations. For Marcus, this was a difficult reality to accept, especially given his belief in America’s commitment to the rule of law and innovation.

Lessons Learned: The Future of Digital Currency

In the aftermath of Libra’s collapse, Marcus shared his reflections on what could have been done differently. One of the key lessons he highlighted was the importance of building future digital currency projects on decentralized and neutral networks, such as Bitcoin, rather than on centralized corporate-led initiatives. “If you’re trying to build an open money grid for the world,” Marcus wrote, “you have to build it on the most unassailable network and asset.” He emphasized that future efforts to create global financial systems must be built on trustless and open technologies that cannot be easily undermined by political forces.

The collapse of Libra remains a significant chapter in the history of digital currencies, and Marcus’ account serves as a reminder of the complex intersection between technology, politics, and regulation in the world of cryptocurrency.