The social networking giant, renamed Meta planchait since 2019 on a virtual currency. But faced with the opposition of the political authorities as financial, Diem, the independent association which bore the project, decided to end it.
Le Monde with AFP
The digital currency project launched with great fanfare in 2019 by Meta, the new name of Facebook, officially buried: the association Diem wore plans to sell its core assets and to dismantle failing to convinced regulators.
The social networking giant had launched into the arena of virtual currency by creating what was initially called “Libra” in 2019. It was to propose a new method of payment outside the banking channels traditional.
Aware of the concerns of regulators face a currency managed by a private company, the US group had decided to entrust its management to an independent entity, based in Geneva (Switzerland), renowned Diem end of 2020.
This initiative was on track but “it became clear during our discussions with the US authorities that the project could not proceed further,” explained the Director General of the Association, Stuart Levey said in a statement Monday 31st January.
“The idea that Facebook makes a cryptomonnaie had distracted everyone,” responded to Agence France-Presse analyst Rob Enderle of Enderle Group. “For regulators, this was going too far. They were clear that they did not trust to Facebook” on the project. Diem will therefore sell its intellectual property and other assets for 182 million dollars (162 million euros) in the bank Silvergate Capital Corporation, specializing in digital currency.
Risks to financial market stability
The original Facebook had devised a new payment method to purchase goods or to send money as quickly and easily as instant message. But the project had, since its launch, provoked an outcry both from the central banks, regulators and policy makers. They worried jumble of risks to financial stability, the fight against money laundering or of the personal data protection.
The fact that Facebook may seek to coin money, as well as central banks, had also sparked outrage many regulators. After the defection of several strong partners like PayPal, Visa and Mastercard, the organization quickly revised its ambitions downwards, before renaming Diem end of 2020.
“From the start, the project Diem sought to exploit the benefits of blockchain technology to design a better payment system and more inclusive,” said Mr. Levey Monday. The association has managed to build and test a system of payments based on technology that also operate the bitcoin, which includes safeguards against its use by criminals, he said.
Acquisition of assets by a California bank
Meanwhile, “we have actively sought feedback from governments and regulators around the world, and the project has changed considerably and has improved accordingly,” noted the official.
But the talks finally broke down and “the best way forward was to sell the assets of the group Diem” said Mr. Levey. The association and its subsidiaries will start to dismantle “in the coming weeks,” he said.
Silvergate, the bank buys the assets of Diem, said in a separate statement it would pay 50 million dollars in cash and repay approximately 1.2 million new shares to Diem for a total amount equivalent to 182 million.
With the assets of Diem, the bank based in California wants to improve infrastructure especially that it has already put in place for its own project “stablecoin” stable digital currency whose price is supposed to be at constant parity with the dollar. Silvergate plans to launch later this year.