First there was Libra, Facebook’s ambitious project to create a Swiss-based, global digital currency. Then Libra was no more; following massive regulatory pressure, the project’s scope was narrowed and the name was changed to Diem.
And now, the project isn’t even Swiss-based anymore, as Diem’s primary operations are being moved from Switzerland to the United States.
On Wednesday, Diem Association announced it has partnered with U.S.-based Silvergate Capital Corporation, whose Silvergate Bank will be the exclusive issuer of the upcoming Diem USD stablecoin.
“We are committed to a payment system that is safe for consumers and businesses, makes payments faster and cheaper, and takes advantage of blockchain technology to bring the benefits of the financial system to more people around the world. We look forward to working with Silvergate to realize this shared vision,” Stuart Levey, chief executive officer of Diem, said in a statement.
Diem is also withdrawing its application for a payment system license from the Swiss Financial Markets Authority (FINMA). The company’s plans “take the project fully within the US regulatory perimeter and no longer require a license from FINMA,” Levey said.
Diem — then Libra — was announced in June 2019, with a long list of partners, and an ambition to create a payment system and a stablecoin pegged to a basket of currencies (stablecoin is a type of cryptocurrency whose value is typically tied to some fiat currency). The idea was for all of that to be presided over by a Swiss-based, non-profit organization, with Facebook being just one of the founders.
However, regulators both in the U.S. and abroad weren’t particularly happy about a Facebook-backed global currency, and key partners such as PayPal and Mastercard withdrew from the project, so Libra changed its name to Diem and said it would kick things off by launching a stablecoin pegged to the U.S. dollar.
Now, with the move to the U.S., Diem has become quite similar to Circle, the issuer of dollar-pegged stablecoin USDC, which is backed by popular cryptocurrency exchange Coinbase.
According to CNBC, Diem is planning to launch a small-scale pilot of its Diem USD stablecoin sometime in 2021.