The former head of Meta’s failed stablecoin project admits he was too ‘idealistic.’ Now David Marcus’s new startup plans to work within the system.

• Lightspark cofounder David Marcus plans to use bitcoin to settle global money transfers in real time.
• Marcus founded the venture in 2022 after running Meta’s failed stablecoin project.
• Investors in Lightspark include crypto venture big shots Paradigm and a16z.

Crypto founders have become more realistic after years of pipe dreams and pitches.

Perhaps this is due to the market — when interest rates are low, investors are more willing to suspend disbelief — or to the industry’s well-known bad actors, but those who remain are no longer promising to take over the world.

David Marcus is an excellent example.

The former PayPal president was in charge of Facebook’s failed stablecoin project, now known as Meta, which was known as Libra and Diem at various points during its brief existence. Marcus admits that the ultimate goal of becoming the go-to currency for the global financial system was overly ambitious.

He explained to reporters at Andreessen Horowitz’s downtown Manhattan office how they were too “idealistic” with their original idea.

“It’s a problem if you’re reliant on one centralized stablecoin to do global payments, as we’ve seen firsthand,” he said.

Lightspark, his new startup, is now working within the system, building on top of Bitcoin to connect, rather than replace, governments and their local currencies. Investors have already poured $175 million into the new company, including well-known venture firms such as a16z and Paradigm.

Why Meta’s crypto project failed

Meta revealed plans to create a digital currency pegged to hard currencies such as the US dollar in 2019. The idea was that people using Facebook Messenger and Whatsapp would be able to send cryptocurrency around the world in real time, which could then be converted to local currencies.

Libra’s goal of making “everyone happy and it’ll be wonderful and everyone will agree,” as Marcus put it, couldn’t be reconciled with political realities.

“You don’t want a private company to become massive in terms of controlling the unit of account and managing reserves through a single point of failure,” Marcus explained.

“If you depeg, and it’s a centralized company that’s managed privately, governments really don’t like that — they want to be in control of their unit of account, and they want to be in control of their currency.”

Even for fanciful crypto standards, the project was zealous. Massive payment companies like Visa, global regulators like the Securities and Exchange Commission, and politicians would have to collaborate to approve a radical transformation of global financial policy coming from a company known for scandal after scandal involving user data and privacy.

In his testimony to Congress on the project, even Mark Zuckerberg admitted that his company might not be the “ideal messenger” for Libra. The project was eventually halted due to regulatory obstacles and concerns about Facebook’s data privacy.

Lightspark’s future path

While Marcus is best known for his work at PayPal and Meta, he also founded three companies that were acquired by competitors.

When he announced his departure from Meta in a tweet in November 2021, he added, “my entrepreneurial DNA has been nudging me for too many mornings in a row to continue ignoring it.”

Marcus’s new startup, Lightspark, aims to make the global payments system simpler, or at least less grandiose.

Users will exchange their local currency for bitcoin, which will then be converted to the local currency of the country where the capital is required. Marcus compares it to a software-as-a-service company that earns money from transaction fees.

The Los Angeles-based firm uses bitcoin as its “neutral internet money” for a variety of reasons, the most important of which are its liquidity and the regulatory clarity governments have provided on the digital currency. Furthermore, because it is not tied to a single country, there is less geopolitical mistrust.

Lightspark is leveraging the best of the crypto industry’s progress, according to Christian Catalini, Marcus’s cofounder who previously worked with him at Facebook.

“The most valuable thing that’s been built has been the connection to legacy systems,” he says. Given bitcoin’s global popularity, exchanges in far-flung locations can convert it to local currencies. JPMorgan is reportedly looking into it as well. Bloomberg reported earlier this month that the Wall Street bank was looking into developing a blockchain-based deposit token to facilitate faster cross-border payments and settlements.

Marcus and Catalini have signed up with various exchanges, including Bahrain-based Rain, and crypto wallets, and hope to complete the first currency transfers later this year. Marcus stated that the firm intends to “seriously ramp it up” next year.

“Money is the last thing that doesn’t move over the internet.”