Diem, a cryptocurrency that was expected to be a stable coin like the USDT and BUSD has been cancelled due to the acquisition of their projects by Silvergate Bank.
Here is a brief history of Diem to get some of us up to speed.
Diem was originally announced as “Libra” in the year 2019. This project received support from payment from financial services companies such as MasterCard and visa. Tech companies like Spotify and Lyft also saw the potential in the project and backed it.
The name was later changed to Diem with the aim of showing that the stablecoin would be independent of Facebook. This was done as a counter-attack to the criticism received from global financial officers, like the US Federal Reserve, since the announcement of the project in 2019 and the deflection by the financial companies; Paypal, Mastercard, and visa. Renowned analyst of the Enderle Group, Rob Enderle said “The idea of Facebook doing a cryptocurrency was a bridge too far for regulators. They have made it clear they don’t trust Facebook with what they are doing now, so sure as heck were not going to let it go into the money business.”
Despite the efforts made by Diem and Mark Zuckerberg, from the rebranding and all other measures put in place to see the acceptance from regulators, the pushback has seen the Diem Project being sold to Silvergate Bank for a staggering $182 million dollars. On Monday, The CEO of Diem’s Network, Stuart Levey in a statement, said that it would “begin the process of winding down”. Later that evening, Silvergate bank confirmed in a press release that they would be purchasing blockchain payment network Assets from Diem.
Prior to this, there have been rumours that Diem was trying to sell their assets so as to get money to pay investors. It was reported by Bloomberg, that the group had been speaking with investment bankers about selling Diem assets, while also helping their developers find a new place of work.
In the statement, made by Diem’s, we got to know that some regulators actually fancied the Diem project. “In the United States, a senior regulator informed us that Diem was the best-designed stablecoin project the US Government had seen,”said Diem CEO, Stuart Levey . The question now is, “what in bitcoins name happened?”, why are they selling if the regulators praised the Diem project? Further on in the statement, we still do not get answers to these questions. We are only told that “it became clear” from the group’s conversations with federal regulators that they would not be able to launch Diem, strange, isn’t it.
Silvergate were originally banking partners with the Diem network for the launch. This was to the condition that Silvergate would both manage the reserves and issue Diem itself. It was reported that they were pressured by the United State regulators and this saw a halt to the launch.
Silvergate, however, promised to continue promoting the OpenSource community that supports the technology. “to continue fostering the open-source community that supports the technology, and we believe that existing contributors will be excited about our vision going forward.”, Silvergate CEO, Alan Lee said.
Meta has however promised to not enforce its trove of cryptocurrency patents against other crypto developers.