Monday , December 5, 2022

Diem’s Troubled Story Could Be Winding Down With Reports of Its Efforts to Dissolve

The turbulent story of the Diem digital currency recorded yet another twist with reports on Tuesday that the two-and-a-half-year-old project is seeking to dispose of its assets. The latest news, first reported by Bloomberg, comes less than a year after the Diem Association moved its headquarters from Switzerland to the United States in hopes of launching a stablecoin through La Jolla, Calif.-based Silvergate Bank, a unit of Silvergate Capital Corp. But Diem has yet to issue any coins, according to a notice on its Web site.

Diem and Meta Platforms Inc., a major backer, did not respond to queries from Digital Transactions News about the latest move. Silvergate likewise did not respond. Some 26 firms, including major names like Coinbase, Shopify, Spotify, and Uber, are listed among the association’s backers.

Diem, which launched in June 2019 with major backing from not only Meta (then Facebook Inc.) but from a number of major payments firms as well, faces a hostile environment for privately issued stablecoins, which are digital currencies whose value is tied to the U.S. dollar or another fiat currency. Federal officials in the United States and other countries have expressed concern that coins issued by such ventures could be inadequately backed by appropriate assets.

At the end of 2021, David Marcus, who headed up Diem for Meta, left that position. Before that, several firms that originally joined in the Diem project, including Mastercard Inc., PayPal Inc., Stripe Inc., and Visa Inc., later dropped out in the face of withering criticism of the venture from banking and finance officials in the United States and other nations. In the wake of these defections, the project adopted the Diem (Latin for “day”) name in December 2020, replacing the original name, Libra. It also set out to create what it proposed as a stronger compliance regime in an effort to reassure regulators and government officials.

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