Christian Catalini, the mastermind behind Facebook’s Libra initiative, shared alarming insights about Stripe’s Tempo and Circle’s Arc, stating these could succeed in business but at the expense of the decentralization principles in crypto.

Key Points:

• Catalini emphasizes that Libra’s innovative self-custodial design was significantly altered due to regulatory pressures.
• He warns that Tempo and Arc might reinforce existing financial hierarchies under corporate management.
• He describes Tempo as a “referendum on the ghost of Libra,” indicating that the dream of a decentralized crypto world could be shifting toward practical centralization.

Background

Launched in 2019, Libra was a bold attempt by Meta to establish a global currency supported by a mix of stable assets, aiming to make payments as easy as sending messages. However, it faced backlash from regulators worried about financial control, systemic threats, and privacy issues. The project was rebranded as Diem in 2022 but ultimately closed, with its assets liquidated.

Reflecting on the journey, Catalini used his social media to discuss the critical early compromises of Libra, mentioning that the initially open design was significantly condensed after extensive regulatory discussions.

In his view, the first major compromise involved moving away from non-custodial wallets, as regulators sought clear accountability which they could enforce in cases of issues arising. Catalini expressed the irony in how open networks today are developing compliance technologies that meet regulatory needs without resorting to conventional frameworks.

Tempo and Arc: Corporate-Led Chains

In contrast, Tempo and Arc are positioned as new payment-focused blockchains intended to simplify financial transactions, offering a stablecoin-centric infrastructure for businesses. Circle launched Arc as a specialized network for stablecoin transactions that eliminates the unpredictability of fees associated with public cryptos.

Just weeks following Arc’s launch, Stripe introduced Tempo, which promises high transaction capacities and seamless integration for stablecoin payments. Both projects are marketed as innovative steps to integrate stablecoins into mainstream financial practices, yet Catalini highlights a potential risk of simply revitalizing the old money management systems with different corporate leaders. He warned that this trend could fracture the global financial landscape into competing sectors instead of achieving the borderless unity envisioned by early crypto proponents.

Catalini articulated a critical observation about the future of Tempo: if it flourishes, it may indicate that Libra’s downfall was more a matter of timing than flawed design, suggesting that the vision of decentralized finance may be yielding to more conventional, organized systems.