Had it succeeded, Diem would have presented two challenges, which were discussed publicly at the time, for the federal government to wrestle with. Libra’s stablecoin would have launched when the U.S. lacked a comprehensive regulatory framework for stablecoins, meaning it would exist in a legal and regulatory gray space. And, while that reality would pose a challenge to the federal government, other stablecoin projects have and will exist in the same regulatory gray space. What was different about Diem was that its regulatory challenge would have been turbocharged by the fact that Facebook’s billions of users would have had access to this sort-of-regulated, sort-of-not-regulated crypto token overnight.
