Facebook Ditches Diem Stablecoin Plans in $200M Sale

Facebook Ditches Diem Stablecoin Plans in $200M Sale

The Diem Affiliation is rumored to comprise made a deal with Silvergate Capital Corp. 

Key Takeaways

  • Nameless sources comprise published that Facebook is promoting the expertise gradual its Diem stablecoin.
  • Silvergate Capital Corp has reportedly agreed to purchase Diem for $200 million.
  • The sale marks the discontinuance of Facebook’s longstanding fight to bag Diem approved by U.S. regulators and lawmakers.

Facebook’s cryptocurrency initiative Diem looks to be coming to an discontinuance. Experiences emerged that the firm would sell its expertise to California monetary institution Silvergate Capital Corp for $200 million.

Facebook Drops Diem

It looks Facebook is performed with the Diem stablecoin. 

Experiences emerged Thursday morning that the social media provider running under Meta Platforms Inc would sell the expertise gradual its Diem stablecoin in a disclose to pay aid its early traders. Nameless sources knowledgeable the Wall Avenue Journal that the California monetary institution Silvergate Capital Corp has agreed to purchase Diem for $200 million.

Diem (previously Libra) launched in June 2019 and became pitched as a skill for Facebook customers to seamlessly transact on the social media platform with out the want for third-occasion intermediaries or advanced forex conversions. 

From the starting, Diem’s pattern has been plagued with disorders, both from a regulatory standpoint and due to contributors of Congress opposing the mission, citing privateness and antitrust concerns. The President’s Working Neighborhood on Monetary Markets doubled down on these concerns, pointing out that combining a stablecoin issuer with a expansive corporation “might well maybe lead to an vulgar concentration of economic energy.”

Diem’s regulatory woes came to a head in October 2019 when Facebook CEO Mark Zuckerberg defended the mission earlier to congress in an strive to bag lawmakers on its facet. With out reference to Facebook enlisting the enhance of fintech giants Visa, PayPal, Mastercard, and Stripe, regulators weren’t gratified Diem would meet all regulatory and compliance wants.  

In a closing-ditch strive to tackle Diem’s regulatory disorders, Facebook ended in Silvergate Bank in Also can honest 2021 to inform the Diem stablecoin, a gallop that the firm hoped would abet again the regulatory process after years of opposition. On the opposite hand, the partnership became in the break unsuccessful in addressing Diem’s disorders, because it looks Facebook is lastly losing by the wayside. 

In most up-to-the-minute months, opinions on stablecoins had been mixed. In December, the U.S. Senate Banking Committee held a hearing on stablecoin regulation, with quite so a lot of senators expressing hesitancy over incorporating dollar-pegged crypto resources into the broader economy. More no longer too long previously, a consortium of U.S. banks proposed a brand recent USDF stablecoin to present a more stable stablecoin option for buyers in the U.S. 

Whereas the Diem stablecoin became unsuccessful for Facebook, future non-public stablecoins might well maybe comprise higher honest correct fortune as policymakers change into more receptive to the opinion of digital dollars. 

Disclosure: On the time of penning this feature, the author owned ETH and quite so a lot of diversified cryptocurrencies.

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