Meta’s stablecoin project, Diem now sold – is it a lost cause or a new beginning?
As the regulatory hurdles were getting worse for Meta-backed Diem, Facebook-parent has now abandoned the project for good, as per a recent statement. And, Silvergate Capital has come in to acquire the asset and the intellectual property rights for the cryptocurrency project.
It is worth noting that the company also operates the crypto-payments platform Silvergate Exchange Network. With names like Coinbase Global and Gemini reportedly part of the Silvergate Exchange Network.
Meanwhile, as the bank holding company confirms the acquisition of the blockchain-based payment network, a stablecoin project might be in the works.
New Stablecoin this year
Silvergate Capital CEO Alan Lane told CNBC they hope to launch one by the end of 2022. He stated,
“We were working last year with Diem and we got to know the team very well, and we couldn’t be more excited to, essentially, be taking the reigns and bringing a stablecoin to market hopefully later this year.”
Further adding that the potential to use blockchain technology for payments and remittance is immense.
What we know is Silvergate can further harness the development, deployment, and operations infrastructure and tools, that it is purchased, for running a blockchain-based payment network. Lane also explained,
“Through conversations with our customers, we identified a need for a U.S. dollar-backed stablecoin that is regulated and highly scalable to further enable them to move money without barriers. As previously stated on our Q4 2021 earnings call, it remains our intention to satisfy that need by launching a stablecoin in 2022, enabled by the assets we acquired today and our existing technology.”
Facebook-parent gives in to regulatory pressure
We can recall that Facebook was originally behind the Libra project launched in 2019. But, the stablecoin project now known as Diem had to give in to regulatory pressures. In response to the sale, Diem CEO Stuart Levey said,
“One of our highest priorities in designing the Diem Payment Network was building in controls to protect it against misuse by illicit actors.”
But the sale also puts some questions ahead for Meta’s metaverse plans ahead. Meanwhile, David Marcus, co-creator of Diem, who left the project late last year congratulated the team.
Congrats to my former colleagues and friends, as well as to @silvergatebank. We all gave our whole hearts, blood, sweat and tears to what I will always call Libra. We were mission driven and were in it for the right reasons (that remain as valid today as they were then). https://t.co/UcRdYsfmMH
— David Marcus – dmarcus.eth (@davidmarcus) January 31, 2022
As far as the purchase is concerned, Silvergate has issued 1,221,217 shares of Class A common stock to Diem and paid $50 million in cash as per the statement. The aggregate value of the consideration comes to $182 million, with Silvergate expected to incur approximately $30 million of additional costs this year.