Christian Catalini, co-creator of Fb’s Libra challenge, warned on Friday that Stripe’s Tempo and Circle’s Arc might succeed commercially however at the price of crypto’s decentralization ideally suited.
Launched in 2019, Libra was Meta’s daring bid to create a world digital foreign money backed by a basket of steady property. The challenge promised to make funds as seamless as messaging, nevertheless it triggered quick backlash from regulators involved about monetary sovereignty, systemic threat, and person privateness. By 2022, Libra — renamed Diem in a bid to reset its picture — was shuttered and its property bought off.
Catalini, who served as Libra’s chief economist, used his Sept. 5 thread on X to revisit the challenge’s early compromises and clarify why they matter now. He mentioned the unique open design, developed with Harvard economist Scott Kominers, was decreased to a brief appendix after months of regulatory negotiations.
The primary main retreat, he wrote, was abandoning non-custodial wallets. Regulators insisted on a “clear perimeter,” that means a accountable middleman they might contact — and penalize — if issues arose.
For supervisors used to intermediated finance, a world the place customers really held their very own cash was unmanageable. “For them, killing self-custody wasn’t a selection, it was an apparent necessity,” he recalled.
Catalini famous the irony: at present, open networks are growing compliance instruments native to blockchain that would have addressed these considerations extra successfully than conventional frameworks. However again then, Libra was compelled to strip away decentralization, a change he described as an early sign of the place corporate-led initiatives had been heading.
His broader lesson was stark: “So long as there’s a single throat to choke — or a committee of them — you’ll be able to’t really rewire the system. Worse, any community with an architect resides on borrowed time.”
Arc and Tempo within the Highlight
Catalini positioned Stripe’s Tempo and Circle’s Arc in that context. Each are new blockchains designed explicitly for funds, promoted as stablecoin-first infrastructure for enterprises and fintechs.
Circle launched Arc on Aug. 12, presenting it as a Layer-1 community purpose-built for stablecoin finance. In contrast to public chains that depend on unstable gasoline tokens, Arc makes use of USDC for charges, providing predictable, dollar-denominated prices.
It integrates a built-in overseas trade engine, guarantees sub-second finality, and contains opt-in privateness options. Circle mentioned Arc will assist cross-border funds, onchain credit score programs, tokenized capital markets and programmable, automated funds.
Simply weeks later, Stripe and Paradigm unveiled Tempo on Sept. 4, describing it as a payments-first blockchain able to dealing with over 100,000 transactions per second.
The community is EVM-compatible, incorporates a devoted funds lane with assist for memos and entry lists, and permits customers to pay each transactions and gasoline in any stablecoin. Stripe mentioned early design companions embrace Visa, Deutsche Financial institution, Revolut, Nubank, Shopify, OpenAI, Anthropic and DoorDash.
Each initiatives had been marketed as steps towards mainstreaming stablecoin funds. However for Catalini, they raised a deeper concern.
A Revolution or a Failed Coup?
Catalini argued that corporate-led chains like Arc and Tempo threat merely rebuilding the previous monetary system with new gamers in cost. As an alternative of displacing card networks and banks, he warned, they might elevate fintech giants to the identical place of dominance. “The throne could have new occupants, however it will likely be the identical throne,” he wrote.
He additionally predicted such networks would fracture geopolitically, with Western and Japanese blocs unlikely to share a single corporate-led infrastructure. The end result, he mentioned, could be competing monetary empires moderately than the borderless system crypto’s early advocates envisioned.
In the end, Catalini described Stripe’s Tempo as a “referendum on the ghost of Libra.” If it thrives, he instructed, it could show Libra failed due to timing, not design — and present that the dream of open, permissionless cash has been overtaken by extra pragmatic, centralized options.
