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Facebook unfriends its own cryptocurrency

‘It became clear from our dialogue with federal regulators that the project could not move ahead’


Pete Carvill

Facebook has called time on its Diem cryptocurrency, which launched under the name Libra in 2019.

The Diem Foundation put out a statement a few days ago to announce that it was selling its intellectual property and other rights related to the cryptocurrency to the Silvergate Capital Corporation for $182m.

Stuart Levey, chief executive of the foundation, wrote at great length about the effort and desire to develop the cryptocurrency. He blamed the failure of the project on the results of dialogue with federal regulators about the risks with the issuance and transferring of such stablecoins.

Levey said: “Despite giving us positive substantive feedback on the design of the network, it nevertheless became clear from our dialogue with federal regulators that the project could not move ahead.  As a result, the best path forward was to sell the Diem Group’s assets, as we have done today to Silvergate.”

He added: “We remain confident in the potential for a stablecoin operating on a blockchain designed like Diem’s to deliver the benefits that motivated the Diem Association from the beginning.  With today’s sale, Silvergate will be well-placed to take this vision forward.  Over the coming weeks, the Diem Association and its subsidiaries expect to begin the process of winding down, but we look forward to seeing the design choices – and the ideals – of Diem thrive.”

The BBC reported that while initial funding for Diem had originated from Facebook, the Diem Foundation was a separate entity. The currency had run into continued opposition and mission changes since its launch in 2019.

In 2020, reported the BBC, “Facebook is reportedly rethinking its plans for its own digital currency after resistance from regulators. It is now considering a system with digital versions of established currencies, including the dollar and the Euro, according to Bloomberg and tech site The Information.”

The British broadcaster wrote earlier this week: “Facebook intended Diem to be a stablecoin which, as the name implies, is a type of cryptocurrency designed to be less of a financial rollercoaster, its value linked to less volatile assets such as national currencies or commodities.”