Ari Redbord, head of legal and government affairs and TRM Labs, joins Cheddar News to discuss why Facebook is ditching its crypto project and what that means for the space.

Between Bells

Facebook's Cryptocurrency Project Diem to Come to an End

Welcome back to between Bells. After three years of development and a series of changes to its name, facebook's DM Cryptocurrency project may become a thing of the past according to records, meta is looking to pull the plug on its DM crypto project reports say the Diem Association is weighing a sale of its assets has a way to return capital to its investor members. The move would be a huge step back from metal which launched its original crypto project back in 2019. Joining us now to discuss is Cherry red board head of legal and government affairs at T R M labs. Welcome to the show, walk us through with DM is exactly for our viewers that don't know here and how does it work? Yeah, absolutely. And thanks again for having me. Um, so yeah, so it's interesting, this is a permission Blockchain based payments service and essentially what that means is unlike sort of cryptocurrencies like Bitcoin and ethereum that we think of as permission list in order to be on the D M network, you have to have permission so it is not essentially open. Um, but what, what's really, I think important is some historical perspective here. You mentioned 2019, you know, when libra when when facebook announced the libra project in 2019, it was really revolutionary and and regulators had been really talking for years about how do we regulate in the Cryptocurrency space, but there really wasn't the urgency that came about when, when liberal launched And what Libra really did was cause global regulators to say, Hey, how are we going to regulate in a space? Uh, you know, where you have the reach of essentially 2.5, you know, billion Facebook users having access to digital money. And what really that that began was a series of actions, you know, whether it was on Capitol Hill or really across the inter agency of the United States and then really overseas on a discussion about how to regulate digital assets. On a personal note, I was at the U. S. Treasury Department in june 2019 when Liberal launched. And I can tell you that it really started urgent conversations. We flew to Switzerland where Liberal was based to meet with with regulators. We worked with teams from what was Liberal at the time now, DM on what would be a sound anti money laundering approach or policy. So really, so much going on back then. Um, and it really has, I think laid a lot of the foundation for what the regulatory conversation is now in the United States and around the world. I do want to get to regulators in just a momentary. But for our viewers, why is DM so important to facebook, especially a big tech company like facebook? Sure, yeah, I think, look, I think it was um in 2019, which was maybe arguably early days in the space, um, to thinking, think about a project of this scale, but look as well as the world moves towards digital money, um, you're seeing these networks, uh, you know, in the age of the Internet. Um, it was all about sort of information and these these networks and that's why you see companies like facebook and twitter and other sort of really uh, be groundbreaking in the information age. And I think that what you're seeing here um in the Cryptocurrency space is this new internet of money and these same companies that really kind of ruled the information age, we're very much looking to engage in this new, uh, you know, democratic financial system that is really doing the same things for finance that that that they did for information. Let's talk about regulators, why the resistance here and why do legislators care so much? You know, it's interesting, I don't know that it's DM or lever a specific as much as you see, all kinds of concerns and you have for for the last few years, um, from regulators and and Capitol Hill and legislators and others around Cryptocurrency. And look the same things that make crypto such an incredible force for good. You know, permission list as we talked about decentralized the cross border value transfer at the speed of the internet also makes it attractive to illicit actors who also want to move money at the speed of the internet. And obviously you have regulators like Treasury and the sec and and others that have serious concerns. However, I think something that's missing a lot of these conversations is there is Blockchain intelligence, like, like TRM labs, um, that actually allows great visibility on sort of the open ledger to allow uh visibility on the movement of these funds, which actually makes for a much more transparent financial system. What would a sale of DM and the failure of Meadows crypto push mean for crypto more broadly here, aeri You know, it's interesting, I think since 2019 we've seen such enormous growth in this space. You see stable coin projects like circle, which is pegged to the us dollar, um as opposed to sort of the original liberal model of a basket of currencies. And I think you've seen so much extraordinary growth in the space that, you know, this was one of now, so many exciting projects and um, we're just gonna see so much more, I think we're pre first inning, uh you know, the game hasn't yet begun when you're talking about sort of the growth of this industry. And um, this is just sort of one example of what will, I think be a really important early chapter In the growth growth of the crypto economy. Speaking of growth in this sector, according to analysts, we know last year, scammers around the world took home a record $14 billion dollars in crypto who is to blame here. Yeah, I know scammers are to blame. Absolutely. Um, you know, look like any financial system you're always going to um, you know, have, have have illicit actors who want to take advantage of that financial system. Quite frankly, if there weren't those illicit actors, the financial system would not have, you would not be flourishing would not be growing. And I think you're seeing a lot of the same things right now in crypto, you're seeing illicit actors, you know, whether it's a terrorist financiers, whether it's scammers or hackers, ransomware, you're sort of seeing all these things. But I think again, what is missing from part of this conversation Is that because of the Blockchain, this open ledger where crypto lives and moves, uh, you know, you have regulators, law enforcement compliance professionals, investigators have more visibility on financial flows than they've ever had before, which actually makes regulation in many respects easier, not harder, you're always going to see bad actors, but if you actually look at the numbers, um, you see a, just a tiny usually considered sort of under 1% of the overall growing illicit crypto economy. Cherry Red board, head of Legal and government affairs at T. R. M. Labs. We love your context. We hope you come back. Thank you so much for your time