Zuckerberg’s vision of using Facebook to equalize cryptocurrency transactions has ended, says Crypto Marketing Center, citing official sources. Diem, the Meta-backed cryptocurrency, has called it quits after multiple rebrands, congressional investigations, and elevated personnel layoffs.
Diem revealed on Monday that it had transferred its assets for around $200 million to Silvergate, a crypto-focused bank with whom it had already collaborated to create a stable coin anchored to the U.S. dollar the year before. In a press statement, Diem CEO Stuart Levey claimed that the move to sell resulted from negotiations with federal authorities that the initiative could not advance.
Diem singled out by authorities
Another Diem founder, former Facebook executive David Marcus, claimed that authorities had slighted Diem because of the Diem-Meta relation; alternatively, the plan would have been approved.
“Here’s to yet another chapter with a maybe more ‘acceptable’ promoter driving the vision forward. There will be ample time in the future for me to properly reflect on the behaviour of certain politicians and regulators along the way, but for now… onward!”David Marcus, Co-founder Diem
The initiative was launched in 2019 and had aimed to make spending money using tokens tied to the U.S. Dollar as simple as sending a message. However, it ran into regulatory resistance right from the beginning. Facebook, now known as Meta, created the app.
Although Facebook created the Libra Association to oversee the token with other companies to protect it, many people feared Libra would increase the tech giant’s power. Many members of the Libra Association quit following the announcement.
Stablecoins potential impact
Libra Association was also a pioneer in stable coins. These coins were designed to have a fixed price to encourage regular transactions and are a novel idea that didn’t conform to regulators. The stable coin market has grown since 2019, and governments worldwide have begun to pay attention and consider legislation. The U.S. Treasury deemed stable coins to be similar to banks in November. The White House plans to order federal agencies to regulate cryptocurrency as a matter of national security. Officials were especially concerned about the project’s potential negative impact on financial stability, data privacy, and money laundering.
Although Meta’s ties with Diem are over now, it is worth noting that Silvergate or other players may be able to revive the project. Even though Meta’s reputation eventually sank it. As we know the plan to equalize cryptocurrency transactions might come true if the stablecoin market increases.Anne M, Hack Growth specialist at Crypto Marketing Center
Diem’s design was transparent and more regulator-friendly than many other stablecoins. It was unlikely that Diem would ever see the same backing as once, with almost all Libra founding team leaving Meta.