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Democrat Lawmaker Quizzes Zuckerberg Over Digital Assets

Last Updated January 23, 2024 1:47 PM
James Morales
Last Updated January 23, 2024 1:47 PM

         Key Takeaways

  • House Representative Maxine Waters has written to Meta CEO Mark Zuckerberg asking him to explain the firm’s interest in crypto.
  • Although Meta scrapped plans to launch its stablecoin, Diem, in 2022, Waters pointed to trademark applications that she said suggest the firm hasn’t given up on digital assets
  • In 2019, Water played an instrumental role in shutting down Diem after she publicly denounced the proposed cryptocurrency.

In 2022, Facebook’s parent company Meta scrapped its plans for a digital currency known as Diem, writing the project off as a non-starter after it failed  to get US regulators on board.

Despite reassuring lawmakers that its days dabbling in digital assets were over, however, a string of trademark applications suggest Meta might not be done with crypto just yet. Raising her concerns in a letter  to CEO Mark Zuckerberg on Monday, January 22, Democratic Representative Maxine Waters demanded an explanation. 

Meta Trademark Applications Spark Digital Asset Concerns

In her letter, Waters identified 5 trademark applications which she said “indicate that Meta has not ceased its activity in digital assets since the shutdown of Diem.”

The company’s ongoing interest in crypto appears to contradict statements delivered to the Financial Services Committee in October 2023. According to Waters:  

“Meta staff stated that the company is not currently conducting, nor planning any work on blockchain-based products or stablecoins. Additionally, Meta staff asserted that Meta is not working with any partners on integrating stablecoins or cryptocurrency into any payments or Metaverse products, and is not pursuing research and development in the space.”

Appealing to Zuckerberg directly, Waters asked whether Meta still has any research and development interest in crypto paymens, or is exploring the potential application of distributed ledger technology on any of the platforms it operates. 

At the time of writing, Meta has not responded to Waters’ letter or CCN’s questions.

Why Did Lawmakers Shut Down Meta’s Stablecoin Project?

Originally known as Libra, Diem was intended to function as a stablecoin powering payments on Meta platforms like Facebook and Instagram.

 Meta’s initial plan was for an international cryptocurrency backed by a reserve basket of US dollars, euros, pounds, Japanese yen, and Singapore dollars. However, by the time it eventually abandoned the project, the company had dialed back its ambitions for Diem, which was to be a more conventional USD-based stablecoin. 

In 2019, when Diem was still known as Libra, Waters called on  Meta to halt the development of its proposed stablecoin, arguing that “the cryptocurrency market currently lacks [the] clear regulatory framework,” needed to support the technology.

The Congresswoman also expressed concern that the project could further Meta’s “unchecked expansion,” and risked extending its reach into the lives of  Americans who use its platforms.

Slow Progress on Stablecoin Regulation

When she initially objected to Meta’s Diem, Waters concluded that the proposed stablecoin should be a wake-up call to regulators, which she said needed to “get serious about the privacy and national security concerns, cybersecurity risks, and trading risks that are posed by cryptocurrencies.” But in the years since then, efforts to pass stablecoin regulations through Congress have hardly progressed an inch.

Although lawmakers on both sides of the aisle have proposed bills that would regulate stablecoins, none have gained the bipartisan support needed to make it off the floor.

In a bid to take control of US crypto regulation, in December the Treasury Department unveiled a string of proposed rule changes relating to digital assets. One of the more controversial proposals would grant the Treasury “extraterritorial jurisdiction” over USD-based stablecoins, even those whose issuers are located in other countries.

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