Facebook Reportedly Ditches Diem Stablecoin Through An Asset Sales Transaction
Facebook reportedly Diem stablecoin through an asset sales transaction
A consortium of companies working on a blockchain-based payment system, the Diem Association, has agreed to sell its technology assets to Silvergate Capital for $200 million, reports the Wall Street Journal. In addition to Meta, which was formerly known as Facebook, the association has a number of other founding members. Diem was the most audacious cryptocurrency bet ever made by Facebook.
According to a report published earlier this week by Bloomberg, Meta is considering selling Diem's assets in order to recoup some of the money that was invested in the project.
In 2019, Facebook announced its cryptocurrency initiative, which was initially known as Libra. Since then, both the Diem Association and Facebook have significantly scaled back their ambitions in order to remain viable. Libra cryptocurrency was intended to be a completely new currency that would be linked to a basket of fiat currencies and securities at the time of its launch.
Regulators and central banks have always been vocal in their opposition to the Libra Association's activities. There was widespread belief that Libra would compete with sovereign currencies, with significant implications for the macroeconomic environment. There was a possibility of shadow banking, inflation, and the development of a method of evading monetary policies.
As a result, the Libra Association took a more pragmatic approach to stablecoins than other organizations. Rather than starting from scratch and creating a new currency, the Libra Association chose to launch several stablecoins that are all pegged to a single currency. For example, one LibraUSD was supposed to be worth one USD at all times, regardless of the exchange rate. LibraGBP, LibraEUR, and so on would all be equivalent in this respect.
Yet another change occurred in the course of the plan. It was announced that Diem would be renamed the Libra Association, and Facebook released a beta version of Novi, its cryptocurrency wallet. The currency used by Novi is USDP, rather than the association's stablecoin (Diem), which is also used on the Diem network. This stablecoin is issued by Paxos, with Coinbase acting as the cryptocurrency's custodian.
David Marcus, who was in charge of all things crypto for Meta, also left the company a few months ago, according to the company. However, while Diem's cryptocurrencies have not yet been released, according to the Wall Street Journal, Silvergate Capital was expected to issue some of the stablecoins and back them up with cash held in their bank account.
Upon successful sale of the Diem Association's assets, Meta and its partners will be entitled to a portion of the proceeds, with Silvergate Capital becoming the sole entity responsible for the Diem project.
In addition to the companies listed above, the Diem Association also includes Andreessen Horowitz (Checkout.com), Coinbase (Iliad), Spotify (Spotify), Uber (Uber), and Union Square Ventures.