Meta (Formerly Facebook) is Scrapping Stablecoin Diem Project, Exploring Sale of Intellectual Property
After more than two years, the Facebook-sponsored cryptocurrency once known as Libra looks to be nearing its conclusion. According to a recent Bloomberg article, the Diem Association, which Facebook established to administer the digital token, is considering selling its assets after encountering pushback from authorities who rejected the plan. Bloomberg claims that the US Federal Reserve “dealt the endeavor a fatal blow” by placing pressure on Silvergate, the banking partner with whom Diem announced a partnership last year to launch the coin. Additionally, I’ve heard from a source that the Fed threatened Silvergate, putting the launch on hold.
Michael Crittenden, a Diem Association spokeswoman, told The Verge that Bloomberg’s piece featured “some factual mistakes,” but refused to elaborate. The cryptocurrency venture is “considering a sale of its assets as a means of redistributing cash to its investor members,” Fortune reported Tuesday, citing sources familiar with the situation. If Diem is truly liquidating its assets, this might be a sign that the cryptocurrency is stuck. Diem is apparently in talks with investment bankers about “the best way to sell its intellectual property and find a new home for the technology’s engineers.”
Originally, Libra was to be a digital currency backed by a basket of global currencies, but authorities swiftly put an end to that plan. As a result, a streamlined design was established, pegged to the US dollar via a renamed Diem token. Apparently, it was insufficient. Additionally, there have been new indications that Diem may not see the light of day. Facebook, which has rebranded as Meta, recently replaced the Diem currency in its digital wallet with another stablecoin from Paxos. And David Marcus, the CEO who invented Libra and managed Meta’s digital wallet project, departed the business late last year when the majority of the project’s initial staff defected.
Faced with regulatory reaction, the Libra Association changed its name to Diem Association in December 2020 to reaffirm its organizational independence. Diem Association (Diem meaning day in Latin) also had a subsidiary named Diem Networks that was responsible for operating the payment system. In October 2019, at a conference in Geneva, Facebook and 20 partner organizations officially joined the digital currency project. To win over authorities, the organization claimed that their cryptocurrency would provide stable coins backed by a single nation’s currency, implying that certain coins will act as the equivalent of a dollar or a Euro.
However, major industry giants, including PayPal, Mastercard, Visa, Mercado Pago, eBay, Stripe, Booking Holdings, and Vodafone, withdrew from the Libra project because to privacy concerns.