Facebook’s cryptocurrency failure came after internal conflict and regulatory pushback

The social media giant’s shuttering of the Diem project followed clashes over its direction and sustained opposition in Washington.

A popular mantra in Silicon Valley is “fail fast.” It took Facebook less than three years to fail in its high-profile cryptocurrency project.

Facebook’s shuttering of the project came in response to internal clashes over its direction and sustained opposition in Washington, according to four people familiar with the effort who spoke on the condition of anonymity to describe sensitive matters.

The company has had previous failures and product shutdowns, most notably an effort to build a smartphone a decade ago. But the decision to fold the project called Diem is the first that appears to relate directly to regulatory pushback, suggesting that bringing future products to market in heavily regulated spaces will be an uphill battle, the people said. That could complicate Facebook’s plans for its virtual reality metaverse.

The failure comes as crypto becomes more mainstream, despite a recent drop in prices. According to Pew Research, 16 percent of Americans have invested in or traded cryptocurrencies, and apps like Coinbase and Robinhood see billions of dollars in cryptocurrencies transact on their platforms every month. Some of Facebook’s Big Tech competitors are dipping their toes in the space too, with Google hiring a team of engineers to work on blockchain technology, which underpins cryptocurrency.

“I see this as the most pivotal battle in the crypto space over the next few years, stablecoins versus central bank-created digital currencies,” he said. “This is just another front in that war.”

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