Quick Facts

David Marcus, former Diem project boss at Meta, claims that United States Treasury Secretary Janet Yellen played a significant role in convincing Federal Reserve Chair Jerome Powell to cancel the project, citing political motivations as the main reason.

The Death of Meta’s Stablecoin Project

In a recent interview, David Marcus, the former Diem project boss at Meta, made some explosive claims about the demise of the company’s stablecoin initiative. According to Marcus, United States Treasury Secretary Janet Yellen played a significant role in convincing Federal Reserve Chair Jerome Powell to cancel the project, citing political motivations as the main reason.

A Stablecoin with a Noble Goal

Diem, the stablecoin project, was initially launched by Meta (formerly Facebook) in 2020 with the goal of creating a low-volatility digital currency that could be used for transactions and payments. The project aimed to provide a secure, trustworthy, and transparent way for individuals and businesses to make financial transactions. Diem’s developers claimed that their stablecoin would be backed by a combination of traditional assets and money market funds, ensuring its value stability.

The Shift in Tone

However, sometime in 2021, the tone around Diem began to shift. The project faced intense scrutiny from regulators, lawmakers, and the public, who expressed concerns about the potential disruption of the existing financial system, the lack of regulatory oversight, and the risk of manipulation. As the criticism mounted, Meta’s leadership started to show signs of hesitancy, and the project’s future began to look uncertain.

The Kill Signal

In November 2021, Meta announced that it would be shutting down the Diem project, citing the lack of regulatory clarity and political uncertainty. Many had assumed that the project’s demise was largely due to the regulatory concerns and financial challenges, but David Marcus has now revealed that there was a more sinister force at play.

A Political Kill

In his recent interview, Marcus claimed that Janet Yellen, the United States Treasury Secretary, was instrumental in convincing Jerome Powell, the Federal Reserve Chair, to kill the Diem project. According to Marcus, Yellen’s opposition to the project was rooted in politics, rather than regulatory concerns or financial advice. Marcus stated that the decision to terminate Diem was “100% a political kill” and attributed it to Yellen’s personal vendetta against Meta.

The Yellen-Powell Connection

Marcus’ accusations may seem outlandish, but it’s essential to consider the relationship between Yellen and Powell. The two are not only colleagues in the US government but have also collaborated closely on financial policy matters. Yellen, as Treasury Secretary, and Powell, as Federal Reserve Chair, often work hand-in-hand to make key decisions that impact the US economy. Given their close proximity, it’s plausible that Yellen could have exerted significant influence on Powell’s thoughts on Diem.

Regulatory Overreach?

The controversy surrounding Diem’s cancellation raises questions about the balance between regulatory oversight and innovation. Proponents of the project argue that imposing stricter regulations can stifle innovation and limit the potential benefits of novel technologies, such as blockchain and cryptocurrencies. Opponents, on the other hand, contend that overly permissive regulations can lead to financial instability and risks to investors.

Lessons Learned

The demise of Diem serves as a cautionary tale for companies embarking on ambitious projects with significant regulatory undertones. The experience highlights the importance of engaging with regulators proactively, building relationships, and being prepared to adapt to changing circumstances. For policymakers, the incident underscores the need to strike a balance between regulation and innovation, ensuring that economic growth and stability are not sacrificed for the sake of caution.

Ex-Diem Head Reveals Death of Meta’s Stablecoin Project Was a Political Assassination