Meta-Backed Cryptocurrency Diem To Be Shut Down After Regulators Blocked

After multiple rebrands, congressional hearings and several high-profile staff moves, the Meta-backed cryptocurrency known as Diem is shutting down.

The association behind Diem confirmed on Monday that it has sold its assets for about $200 million to Silvergate, a crypto-focused bank it partnered with last year to launch a US dollar-pegged stablecoin. The decision to sell was made after “it became clear from our dialogue with federal regulators that the project could not go ahead,” Diem CEO Stuart Levey said in a press release. (It is already known that the US Federal Reserve was a major opponent of the Diem launch.)

The sale of Diem’s ​​assets marks the end of an effort that, in retrospect, was doomed from the start. Facebook, which is now called meta, created the apps that would be the main way people used the token. So even though Facebook created the Libra Association to co-manage the token with other companies, people immediately feared that Libra would make the controversial tech giant even more powerful. In addition, members of the Libra Association began to drop out just months after the group was announced.

Libra also came on the scene when stablecoins, which are designed to hold a fixed price to encourage regular transactions, were a relatively new idea and not closely watched by regulators. Given how big the stablecoin market has become since 2019, governments around the world are starting to notice and look at legislation. In November, the US Treasury Department said it believed stablecoins should be regulated like banks. And Barron’s recently reported that the White House plans to direct federal agencies to regulate cryptocurrencies as a matter of national security.

While Meta’s ties to Diem are over, there’s always the chance that Silvergate or some other player will revive the project. While Meta’s reputation eventually sank it, Diem’s ​​design was more transparent and regulator-friendly than many existing stablecoins. But with almost the entire Libra founding team out of Meta, there was little chance that Diem would ever resurface with the same level of support as ever.

It’s clear that at least some of Libra’s original leaders felt incensed by the way the project was politicized. David Marcus, the former Facebook executive who created Libra and left late last year, tweeted the following about the Diem shutdown:

A silver lining to Diem’s ​​demise is that Meta has pledged not to enforce his wealth of cryptocurrency patents against other crypto developers – something that even Jack Dorsey has done. think it’s a good idea.

Frank Broholm had acquired considerable experience in writing and editing publications before recruited by The Media Today Chronicle News portal as Editorial Manager. His key task is to conduct effective business reviews based on the most recent business…