Mark Zuckerberg's cryptocurrency plans seem to be going down the drain due to regulatory pressures. The controversial cryptocurrency project that was once defended by Facebook CEO Zuckerberg in front of Congress is unraveling as Diem Association, once known as Libra backed by Meta Platforms Inc., is looking at selling its assets to return capital to its investors, according to a report by Bloomberg.
Diem is currently discussing how to sell its intellectual property with investment bankers and also finding new jobs for the engineers who developed the technology, cashing out whatever value remains in its once-ambitious Diem coin venture, according to close sources.
Meta's Facebook in June 2019 unveiled the idea of its stable digital currencies and ever since then, the crypto project had a rocky journey. Later in December 2020, the Libra Association rebranded itself as Diem to deviate itself from its original objectives.
Originally the Diem project envisioned a cryptocurrency backed by a collection of fiat currencies, which could be used as a means of exchange worldwide. But, the project immediately prompted regulatory backlash. Lawmakers demanded all development to be ceased until they could better understand the project and ensure there weren't any risks to financial stability.
According to reports, in May last year, Diem had said that it would work closely with Silvergate Bank to launch a U.S. dollar-pegged stablecoin to buy and sell other crypto. Another subsidiary of the association called the Diem Networks U.S., is suppose to run the Diem Payments Network and register as a business for money services with the Financial Crimes Enforcement Network (FinCEN).
Silvergate Was Supposed to Issue the Diem USD Stablecoin
Silvergate is suppose to be the formal issuer of the Diem USD stablecoin and manage the reserve backing the digital token. But, without a green signal from the bank's regulator, Silvergate couldn't issue the new asset with confidence the Fed wouldn't approve, and hence, the Diem effort had no coin .
Meanwhile, the company is in the initial stage of its discussions and there's no guarantee Diem will find a buyer, according to sources. Reportedly, Meta owns about one-third of the venture while the rest is owned by members of the association.
According to Diem official website, it has partnered with several venture capital firms including Andreessen Horowitz, Ribbit Capital, Union Square Ventures, and Thrive Capital apart from Singapore state-owned investor Temasek Holdings Pte. The website also lists some crypto companies like Coinbase Global Inc., and Uber Technologies among others.