Facebook’s cryptocurrency dreams may have been dashed. Libra, now called Diem, was to be Meta’s foray into the world of stablecoins. However, after intense scrutiny from Congress and the U.S. Federal Reserve, plans to issue Diem seem to have failed.
Is Facebook’s cryptocurrency dead?
According to Bloomberg, the Diem Association, the Meta backed initiative that developed the Diem, is in talks on how to sell its assets best. Since the Diem never really got anywhere, any funds raised would go toward returning investor money.
When Facebook unveiled its plans to mint stablecoins in 2019, it came under fire from all sides. The public didn’t like it, the press wasn’t a huge fan, and the government was skeptical as well. However, Zuckerberg isn’t one to let an intense loathing of everything he and his company does stop him from committing to a plan. The currency was initially called the Libra and was meant to be used as payment in Facebook Messenger and WhatsApp.
However, this initiative was far from an in-house-only scheme. eBay, Lyft, MasterCard, Spotify, Uber, Visa, and others were founding members of the Libra Association. However, after regulators met Facebook’s crypto dreams with skepticism, several vital investors pulled out before fully committing.
Despite setbacks, the project continued, changing its name to Diem and finally finding an issuer in Silvergate Bank. However, the Federal Reserve refused to give explicit approval, and Silvergate didn’t have the confidence to issue Diem with the risk of a hefty government crackdown.
Without an issuer, Diem is essentially dead in the water, giving Meta and other investors no other choice but to end the project. In addition, the Federal Reserve didn’t have confidence in Meta’s ability to regulate its use, especially given Facebook’s myriad privacy, misinformation, and fraud problems. Whether or not this will dissuade Meta from pursuing a cryptocurrency in the future is yet to be written.
