In constantly volatile times, it is easy to forget about ambitious projects that didn’t really come to much. Meta’s Mark Zuckerberg once had an idea about a cryptocurrency project, Diem, which kind of went kaput as fast as it gained momentum.
According to Fortune, the Diem Association (formerly known as Libra), which is home to Meta Platforms Inc CEO Mark Zuckerberg’s ambitious cryptocurrency stablecoin project, is considering an asset sale more than two years after its launch in order to monetize its intellectual property and any other economic value left in the crippled, once high-flying undertaking.
What is Diem?
Meta originally proposed a stable digital currency, or stablecoin, in 2019, with the goal of “revolutionizing global financial services,” which would be accomplished by a joint effort between numerous organizations.
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Meta had then formed a partnership with Silvergate Bank in order to launch a Diem USD stablecoin. Stablecoins, in particular, are less volatile than their other crypto cousins since they are linked to a single asset class, in this instance the dollar.
What led to its untimely collapse?
However, according to sources, discussions between Diem and the Fed failed when the latter refused to approve the plan, leaving Silvergate unable to issue any asset without fear of a Fed raid.
Notably, once Zuckerberg was summoned by the Federal Reserve to defend the project in the light of increased regulatory scrutiny, Meta’s co-founder David Marcus left, significantly reducing the scope of Diem. Facebook also trialed its cryptocurrency wallet, which was initially planned for Diem with the Paxos stablecoin, in 2021, signaling the idea’s doom.
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Stablecoin issuers should be regulated banks, according to a paper issued last year by the President’s Working Group on Financial Markets, because merging an issuer with a large tech business might lead to “excessive concentration of economic power.”
According to the Verge, a Diem Association official, Michael Crittenden, stated that the initial Bloomberg article on the topic included “some factual errors,” but did not elaborate.
Former Twitter CEO Jack Dorsey tweeted “Carpe Diem” to announce the company’s impending closure. Meta holds a third of the company’s stock, with the rest held by other members of the group. Despite the lack of specifics on who has invested in Diem, the project website lists venture capital firms such as Andreessen Horowitz, Union Square Ventures, Ribbit Capital, and Thrive Capital, as well as Singapore state-owned investor Temasek Holdings Pte, crypto-focused Coinbase Global Inc, ride-hailing app Uber, Shopify, and others.