Meta (formerly Facebook) made serious waves in the mainstream when it announced a new stablecoin in 2019, to be backed by a basket of currencies. The US Government freaked out and hauled in Meta executives for a grilling and showed how much education is still needed in government around digital currencies. Perhaps this was doomed to happen while Facebook itself has come under increasing pressure around spreading and profiting from misinformation.
We have closely followed as the project sought a payment licence in Switzerland, complained about legacy payment systems, survived the US government bullying Stripe, Visa and Mastercard into leaving the consortia, with booking.com leaving shortly afterwards, and Mark Zuckerberg testifying (and being grilled) before the US Congress. Despite media hostility, including a front page attack by the Australian newspaper, Diem (then Libra) continued to work hard on the project, was the subject of a debate at the Australian Payments Network Summit, quietly deleted a reference to investment returns for investment tokens, and was used as a measure of when the Bank of Canada might get involved in stablecoins.
Further changes were made, moving away from a single token backed by multiple currencies towards jurisdiction specific tokens, with a simplified whitepaper, then a licence application was finally lodged with Switzerland's FINMA. A CEO and Chief Legal Officer were appointed, three new members joined the consortia and the Libra wallet became rebranded to 'Novi'. As 2020 ended, the Financial Stability Board started examining Libra and stablecoins and the consortia rebranded into 'Diem'.
In 2021 Diem partnered with Silvergate bank to issue a US Dollar stablecoin and moved primary operations from Switzerland to the US. Despite registration with the US Financial Crimes Enforcement Network (FinCEN), the US Fed continued their dim view of the plan and declined to confirm approval of the issuance of such a stable coin. A partnership between Novi and Paxos was announced but not much was heard from Diem for the latter half of 2021.
Despite Paypal announcing plans to launch a stablecoin, this week reports came in that Diem had entered into a deal to sell its assets (organised under Diem Networks US) to Silvergate Bank for $200M. If the sale proceeds, Diem will be in a position to return funds to investors and wind down operations.
While no doubt many blockchain skeptics will dance on Diem's grave and declare this the death of stablecoins, the lessons learned from the skilled team and hardworking individuals who strived to make Diem a success will all form part of the ongoing knowledge base building towards CBDCs and a decentralised future.
Carpe diem, indeed.
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