The controversial cryptocurrency project that Facebook CEO Mark Zuckerberg once defended before the US Congress is struggling after regulatory pressure. The Diem Association, the cryptocurrency initiative formerly known as Libra, backed by Meta Platforms, is considering selling assets as a way to return capital to members’ investments. The Diem Association is in discussions with investment bankers about the best way to sell intellectual property, find a new place for the engineers who developed the technology, and earn any remaining value in the joint venture. Diem’s once ambitious.
|Diem Association is in discussion with investment bankers about the best way to sell intellectual property
Engadget screen capture
In 2019, Facebook first announced the idea of a stable digital currency (stablecoin), aiming to revolutionize global financial services. The company implemented the plan in collaboration with dozens of other companies. But this alliance was not enough to protect the project from worldwide regulatory scrutiny. After Mr. Zuckerberg was called to testify, some partners abandoned the project and it was renamed Diem.
The Diem Association has reached an agreement with Silvergate Capital Corp to issue the Diem, but resistance from the Fed has dealt the final blow to the effort. Without the green light from the Fed’s regulator, Silvergate cannot issue new assets in the belief that the Fed won’t break it. A Fed spokesman declined to comment on the agency’s negotiations with Diem supporters. Neither Meta nor the Diem Association immediately responded to requests for comment.
It is not clear how potential buyers will judge Diem’s intellectual property or the engineers who helped develop it. Discussions about Diem have been going on since early, many also warn about this cryptocurrency and there is no guarantee that Diem will find a buyer. According to a source familiar with the matter, Meta owns about a third of the Diem Association, with the rest owned by other members of the association.
Diem Association members, which include venture capital firms and technology companies, agreed to invest and pay to join when the association was formed. It remains unclear exactly which companies, other than Meta, have invested in the initiative.
In November 2021, the US federal watchdog finally made clear what it was after, saying that stablecoin issuers should be regulated by banks, if tokens are to be used as a means of purchasing and sell everything. The group of regulators is concerned about not being able to control if a large network of users of a technology company suddenly start trading in the new currency. Additionally, combining a stablecoin issuer with a large corporation “could lead to an over-concentration of economic power.”