Catalini’s Reflections on Crypto’s Path Forward
In a recent discourse that has sparked considerable conversation in the cryptocurrency community, Christian Catalini, co-creator of Facebook’s ill-fated Libra project, offered a sobering analysis of new blockchain ventures spearheaded by corporate giants like Stripe and Circle. On September 5, Catalini took to social media platform X to unravel the parallels between these modern initiatives and Libra’s own tumultuous journey, emphasizing the potential costs to the decentralization ideal that many in the crypto space hold dear.
Lessons from Libra’s Legacy
Launched in 2019, Libra was Facebook’s ambitious attempt to redefine global finance with a digital currency backed by a basket of stable assets. The vision was simple: make payments as effortless as sending a message. However, it quickly became a lightning rod for regulatory scrutiny, with authorities voicing concerns over financial sovereignty, systemic risks, and user privacy. By 2022, the project—rebranded as Diem in a bid to refresh its image—was shuttered, its assets sold off, and its aspirations left unfulfilled.
Catalini, who played a pivotal role as Libra’s chief economist, used his reflections to highlight the compromises that were made under regulatory pressure. The original blueprint, crafted with Harvard’s Scott Kominers, was substantially diluted after protracted negotiations with regulators. One of the most significant concessions was the abandonment of non-custodial wallets. Regulators demanded a “clear perimeter” of responsibility, meaning a contactable and potentially penalizable intermediary was necessary. For them, the concept of users truly holding their own money was untenable. “For them, killing self-custody wasn’t a choice, it was an obvious necessity,” Catalini recalled.
The irony, Catalini noted, lies in the fact that today, open networks are developing compliance mechanisms that could have addressed these regulatory concerns more effectively than traditional frameworks. Yet, at the time, Libra’s concessions marked an early indication of the direction corporate-led projects were likely to take.
Arc and Tempo in the Spotlight
In the current landscape, Stripe’s Tempo and Circle’s Arc are drawing attention as they carry forward the torch of stablecoin-based payment systems. Circle’s Arc, launched on August 12, is a Layer-1 network explicitly built for stablecoin finance. It uses USDC for transaction fees, ensuring predictable costs, and promises sub-second transaction finality. The platform is designed to facilitate cross-border payments, onchain credit systems, and tokenized capital markets.
Just weeks later, on September 4, Stripe and Paradigm unveiled Tempo—a blockchain designed with payments as its core focus. Capable of processing over 100,000 transactions per second, Tempo is EVM-compatible and supports transactions in any stablecoin. Early collaborators include industry heavyweights like Visa, Deutsche Bank, and Shopify, underscoring its potential to revolutionize fintech infrastructure.
While both projects are touted as milestones in mainstreaming stablecoin payments, Catalini raises a cautionary note. He suggests that these initiatives might merely reconstruct the traditional financial system with different players at the helm. Rather than displacing existing card networks and banks, such platforms could elevate fintech giants to positions of power akin to those of established financial institutions. “The throne will have new occupants, but it will be the same throne,” he warned.
A Revolution or a Failed Coup?
A critical concern for Catalini is the potential for these corporate-led networks to exacerbate geopolitical divides. He predicts the emergence of separate financial empires, with Western and Eastern blocs unlikely to converge on a single corporate-led infrastructure. This stands in stark contrast to the borderless utopia envisioned by early crypto advocates.
Catalini describes Stripe’s Tempo as a “referendum on the ghost of Libra.” If Tempo succeeds, it may suggest that Libra’s failure was a matter of timing rather than design flaws. It could reveal that the ideal of open, permissionless money has been supplanted by more centralized, pragmatic solutions.
Balancing Innovation and Tradition
Catalini’s reflections serve as a crucial reminder of the delicate balance between innovation and tradition in the world of digital finance. As Stripe’s Tempo and Circle’s Arc navigate the complexities of modern financial systems, they tread a fine line between leveraging technological advancements and preserving the foundational principles of decentralization.
The conversation around these new ventures underscores a broader debate within the crypto community: Can corporate-led initiatives coexist with the ideals of decentralization, or do they inherently undermine them? As these projects evolve, stakeholders across the spectrum will need to grapple with these questions, shaping the future of global finance in the process.
As we witness the unfolding of Tempo and Arc, the crypto community—and indeed, the broader financial world—must remain vigilant in assessing the implications of these developments. Catalini’s insights remind us that the journey towards a truly decentralized financial system is fraught with challenges, but also ripe with opportunities for those willing to innovate without sacrificing core principles.
Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
