Facebook has faced an uphill battle in winning over regulators in the United States, and despite pouring millions into lobbying efforts as well as rebranding from Libra to Diem, Washington is still not impressed. A recent report cited sources within the Treasury and other watchdogs who claimed that regulators still hold many concerns over the ever-evolving stablecoin project.
Facebook has had its way in a number of industries it has set its sights on, either by investing billions or gobbling up its competition.
However, in the past two years, it has been unable to break through in the world of finance with its Libra-Diem stablecoin project. And as the Washington Post now reports, it’s not edging any closer to impressing U.S. regulators.
Since rebranding to Diem and overhauling the structure—and losing some of its original partners like eBay—Facebook’s digital payments project has made concerted efforts to win over regulators.
According to The Post, Facebook Financial head David Marcus has been in Washington to meet with regulators, and he tried to convince them that Novi, Facebook’s Diem-based payments platform, could help bank the unbanked.
Diem executives believe that regulators are coming around on their tough stance. One of them, who spoke to The Post on the condition of anonymity, claimed regulators had told Diem that its stablecoin design was “positive.” The project has been completely overhauled to appease regulators, including abandoning features such as anonymous transactions, he added.
While Diem becomes confident about its chances of approval, sources within the U.S. Treasury told the newspaper that not much has changed. The Treasury, now led by Janet Yellen, is concerned that Diem could undermine financial stability. Officials fear that the Diem conglomerate could burgeon and if it ever crashed, it could threaten the entire economy.
And then there are the Facebook concerns. The social media giant has made itself an easy target for watchdogs with data and anti-trust scandals. While the Cambridge Analytica scandal was its biggest, the Biden administration has also clashed with Facebook over the spread of COVID-19 misinformation on its platform.
Rep. Maxine Waters (D-CA), chairwoman of the House Financial Services Committee, summarized regulator’s concerns, stating, “Facebook may have rebranded their project with a new name, but they have done nothing to address the major privacy, national security, consumer protection, and monetary policy concerns about the project.”
Watch: CoinGeek Zurich panel, Stablecoins on BSV
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