David Marcus Explains Why Diem Was Shut Down
Date: 2024-12-02 Author: Gabriel Deangelo Categories: BUSINESS
According to David Marcus, the US authorities had no legal grounds to intervene, but resorted to intimidation of financial institutions. Despite initial support from companies like Visa and PayPal, the project faced multiple regulatory hurdles, causing key partners to leave the initiative.
Shortly after Diem’s launch, Marcus was called to testify before the US Congress’s banking and finance committees. He noted that the project’s progress was held up at every stage. It was only in 2021 that regulators were able to agree on issues related to financial crime, consumer protection, and reserve management.
While Fed Chairman Jerome Powell was willing to approve a limited rollout of Diem, Treasury Secretary Janet Yellen was categorically against it. She called the project “political suicide,” which ultimately put an end to its implementation. Soon, the Fed began calling participating banks, warning that their participation in Diem was undesirable.
Marcus called the situation a politically motivated elimination of the project: “The United States, where I immigrated because of my belief in the rule of law, used intimidation to stop Diem, which could have changed the world of international payments.” He emphasized that this experience showed the importance of building financial systems on decentralized networks such as Bitcoin.
Diem’s owner Meta abandoned the project in 2022, selling its assets to Silvergate Capital. However, Silvergate declared bankruptcy in 2023, unable to cope with financial difficulties.
