Diem Confirms Shut down as Silvergate Acquires the Stablecoin Project
In an official announcement, Diem Association stated that it will "begin the process of winding down" its plans to launch a stablecoin following the sale to the crypto-focused, California-based bank Silveragte.
"We remain confident in the potential for a stablecoin operating on a blockchain designed like Diem's to deliver the benefits that motivated the Diem Association from the beginning. With today's sale, Silvergate will be well-placed to take this vision forward," Diem Networks CEO Stuart Levey said.
Earlier last year, Silvergate partnered with the Diem Association to launch a dollar-backed stablecoin. Under the terms of that arrangement, Silvergate would both manage the reserves and issue the stablecoin itself. However, the planned pilot program was reportedly scrapped due to resistance from federal banking regulators.
Facebook's Failed Crypto Venture
Originally called Libra, Facebook unveiled its crypto effort back in 2019. From the beginning, the project faced strong opposition from regulators and central banks worldwide, accusing that the cryptocurrency would compete with sovereign currencies that could impact the global monetary policy.
Due to this, the Libra Association decided to launch several single-currency stablecoins. But that plan was changed again and the Libra Association became the Diem Association.
Under the project, Facebook launched a pilot version of Novi, its cryptocurrency wallet where instead of using the association’s stablecoin on the association’s blockchain, Novi uses USDP as its currency, a stablecoin issued by Paxos, with Coinbase managing crypto custody.
While Diem’s stablecoin is yet to be launched, a couple of months ago, David Marcus, who led Meta's crypto projects, also left the company.