Meta’s involvement in the stablecoin sector dates to 2019 when it started the Libra stablecoin initiative. The project garnered significant attention not only because of Meta’s participation but also because the other companies that would be its partners in the initiative included household names such as Visa, Mastercard, PayPal and Stripe. However, the project immediately faced strong pushback from regulators and central bankers, leading to the major payment firms dropping out within months of the project being unveiled. Libra was subsequently renamed Diem but the project was all but doomed by then, and it was shut down in early 2022 amidst increasingly harsh warnings from regulators.

The landscape of digital currencies has since matured and crypto has entered the mainstream. Stablecoin issuers today are also more willing to share the earnings on the stablecoin’s reserve with third parties such as distributors or partners. Consequently, there is less need for a payment partner, such as Meta, to be involved in the development of stablecoins and the entire technology stack. Thus, Meta will most likely be using other stablecoins with an agnostic approach toward the type of stablecoin used, as opposed to choosing one specific provider. What will be important for Meta is the digital wallet with which consumers use to store, send and receive stablecoins.

Meta’s interest in the payment space stems from the potential to monetize the huge volume of payments that the company processes. In 2020, Meta was already processing payments amounting to US$100 billion annually and that amount has only grown further since then. Moreover, generating an additional revenue stream from payments could help to diversify Meta’s income which is predominantly from advertising. Another motivation for Meta could be to increase the monetization of its users outside of North America and Europe. For example, in emerging Asian markets such as Bangladesh, India and Pakistan, the market for remittance presents a sizable opportunity with notable pain points to address such as the high transaction costs, long wait times, and lack of transparency.

Meta’s foray back into the stablecoin space comes at a time when the Trump administration has taken a more favorable stance to crypto and with stablecoins gaining wider acceptance in the mainstream financial sector. Other major payment players have also been making moves in the space. For instance, Fidelity announced that it is exploring the launch of its own stablecoin, and Stripe recently completed its acquisition of Bridge and launched stablecoin-funded accounts in more than 100 countries. Previously, Meta was too early to the party and had to leave empty-handed. This time around, the political climate and industry developments appear to be in their favor.