Zuckerberg suddenly restarts the stablecoin project

Authors: Leo Schwartz and Ben Weiss Translated by: Liam Source: Fortune

In 2019, Meta announced an ambitious plan: to launch a new stablecoin that could operate across Facebook, WhatsApp, and numerous other digital platforms. However, after facing strong opposition from the U.S. Congress and other legislative bodies, the company ultimately abandoned the plan. Now, Meta is once again testing the waters in the stablecoin space. According to five insiders, the company is in discussions with cryptocurrency firms to launch a stablecoin as a means of managing payments and has hired a product vice president with stablecoin experience to drive the discussions. The identities of these five insiders are known to Fortune magazine, but they requested anonymity to discuss the business confidential.

Meta declined to comment.

Stablecoins are a type of non-volatile cryptocurrency pegged to the US dollar, which has attracted significant attention in the blockchain industry for a long time. However, the Biden administration's tough anti-cryptocurrency policies have limited their mainstream adoption. Nevertheless, the election of Donald Trump as president last November, along with the recent acquisition of stablecoin startup Bridge by payment giant Stripe for $1.1 billion, has propelled a broader application of stablecoins in the financial sector, especially as a tool for cross-border payments.

In the past month, Visa announced a partnership with stablecoin infrastructure provider Bridge, financial company Fidelity revealed that it is developing its own stablecoin, and Stripe launched a new financial account based on stablecoins.

Meta's interest in this technology reflects the growing attention non-crypto companies are paying to stablecoins, especially as congressional lawmakers debate two bills aimed at regulating stablecoins, which seek to end years of regulatory uncertainty.

Meta's Crypto Plan

According to her LinkedIn profile, Ginger Baker joined Meta as Vice President of Product in January this year, focusing on fintech and payments. She previously held an executive position at fintech company Plaid and still serves as a board member of the cryptocurrency company Stellar Development Foundation, which manages Layer-1 blockchain. According to a knowledgeable source, she is assisting Meta in advancing its work on stablecoin exploration.

Meta refused Baker's request for an interview.

According to three informed sources, Meta has reached out to several crypto infrastructure companies earlier this year. The discussions are still in the preliminary stages, but the focus is on a core advantage of stablecoins over fiat currencies - the ability to make payments to individuals in different regions at lower costs, while traditional payment methods like wire transfers incur high fees.

An executive from a cryptocurrency infrastructure provider suggested that Meta's subsidiary Instagram could integrate stablecoins to make small payments of around $100 to creators in different markets, which would incur lower fees than using fiat payments. The executive described Meta as currently being in a "learning phase" and added that Meta would remain neutral in selecting the type of stablecoin, rather than binding itself to a specific provider, such as Circle's USDC. Two other cryptocurrency executives also revealed to Fortune magazine that they have had early discussions with Meta about payment scenarios.

At the same time, Circle poached Matt Cavin from the gaming blockchain company Immutable in March. According to an informed source, Cavin is in discussions with Meta and other tech giants regarding related matters. Cavin's LinkedIn profile shows that his current position at Circle is "Head of Strategic Partnerships, Level 1," but it does not specify the partner companies.

Circle declined to comment.

Explosive Growth of Stablecoins

Meta's exploration of stablecoins is particularly noteworthy as it was the most well-known large tech company to explore the integration of cryptocurrencies. In 2019, Meta announced a blockchain initiative that later evolved into Libra, a proposed coalition of companies including Uber and PayPal, which aimed to launch a stablecoin backed by a basket of fiat currencies. After being renamed Diem, Meta abandoned the project under regulatory scrutiny in early 2022. Meta sold Diem's assets to the crypto-friendly bank SilverGate.io.

Several former employees who participated in the Libra project subsequently founded their own cryptocurrency companies, including David Marcus, the founder of the Bitcoin payment infrastructure company Lightspark. Other former Meta employees also leveraged Meta's technology to redevelop their own blockchains. Notably, the founders of Aptos and Sui, both of which run on the proprietary programming language Move developed by Meta.

On Tuesday, Facebook founder and CEO Mark Zuckerberg delivered a speech at the Stripe conference, where he acknowledged the failure of Diem during a stage conversation with Stripe co-founder John Collison, as shown in a video obtained by Fortune. Zuckerberg stated, "That thing is no longer viable."

When asked about Meta's tendency to often be at the forefront of technological trends, Zuckerberg stated, "Of course, being ahead is much more interesting than being behind." However, he added, "There are still many areas where we are behind and need to work hard to get back in the game, and I think we are doing pretty well on that front."