After the Patent and Trademark Office approved one of Meta’s ideas for digital currency software, Congresswoman Maxine Waters (D-Calif.) did something. She wrote a letter to Meta’s CEO Mark Zuckerberg and COO Javier Olivan on January 22 in which she expressed concern about the company’s recent actions in the cryptocurrency area.
The letter, which came a week after Meta’s applications on March 18, 2022, raised concerns about the company’s obvious ongoing dedication to growing its role in the digital assets ecosystem. Even so, Meta hasn’t said anything and hasn’t responded to Fortune’s request for comment in the media.
Meta has put in five patent applications in the last year that are all about cryptocurrencies or blockchain. Waters said that these trademark entries don’t seem to match up with what the Democratic Financial Services Committee and Meta staff had said before. Waters’ letter says that Meta employees told him that the company had no plans to make any changes to digital assets or blockchain. Waters wants to make sense of these contradictory comments by asking for more information.
This is not the first time that Waters, who is the ranking member of the House Committee on Financial Services, has had a disagreement with Meta officials. When Meta was still called Facebook in June 2019, it announced plans to make a stablecoin (a cryptocurrency that is tied to a reserve currency like the U.S. dollar) and a wallet service that were first named Libra and Calibra. Waters’ close attention shows how tense things are still between officials and big tech companies that are getting into the cryptocurrency market.
Concerns were made about Facebook’s plan to make a cryptocurrency, which was first called Libra and then changed to Diem. This was because it could hurt competition and market concentration. Facebook was in charge of the Diem Association, which wanted to release a stablecoin that would be linked to the value of the U.S. dollar. But the project was put on hold because of problems with the rules and worries about how much power would be gathered. The group tried to handle these concerns by rebranding and playing down Facebook’s role, but it didn’t work, and the stablecoin was never released.
A study from the President’s Working Group on Financial Markets, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency talked about how the project might affect competition and market concentration. The report raised worries about the fact that a stablecoin and its wallet are made by the same company. It also talked about how a stablecoin that is widely used as a form of payment could hurt competition. People saw the project as a way for Facebook to get into the bitcoin market and help with problems like slow cross-border payments and getting more people access to money. But some people didn’t think that these problems needed a new coin to solve them. They were also worried about how the project would affect data privacy and the way power would be centralized.
The impact of network effects on bitcoin value, where user growth increases value, was investigated. Such impacts are frequently linked to substantial market concentration, raising concerns about competition in the bitcoin industry.
Despite efforts by the Diem Association to engage with regulators for over two years, the organization eventually collapsed, transferring all assets and intellectual property to Silvergate, a crypto-focused bank based in California. Diem’s CEO, Stuart Levey, cited conflicting signals from regulators, stressing favorable feedback on the stablecoin project’s innovation. However, despite efforts to resolve concerns, it became clear that regulatory dialogue slowed the project’s progress, prompting its cancellation in January 2022.
